National Electric Power Regulatory Authority (Nepra) has allowed K-Electric to increase power tariff by Rs 1.94 per unit, under fuel adjustment mechanism across the board, except lifeline consumers. The determined raise in power tariff will be charged in three instalments. The regulator has determined tariff under monthly fuel adjustment formula after public hearings.
Nepra has issued three different notifications according to which 44-paisa per unit increase has been determined for October 2013, which will be charged in September 2014, 63-paisa per unit determined for November 2013 will be included in the bills of October 2014 and 87-paisa per unit increase determined for the month of March 14, 2014 to be charged in December 2014.
Agriculture consumers will be exempted from 63-paisa raise per unit determined for November 2013. According to Nepra, during the hearing, K-Electric submitted that main reason of the claimed variations in the fuel cost of its own generation was the decrease in generation on furnace oil, which had decreased from 217.071 GWh with the reference to the month of September 2013 to 57.640 GWh in November, 2013. K-Electric further submitted that being the cooler month; the November demand was on the lower side, which is the main reason of low generation on furnace oil.
In the fuel cost component of power purchase, K-Electric submitted that the major reason of claimed variation is the increase in fuel cost of the energy procured from NTDC which has increased from Rs 6.5722 /kWh in September, 2013 to Rs 7.644/kWh in November, 2013.
Qazi Ahmed Kamal, representing Karachi Chamber of Commerce and Industry, during the hearing as well as in writing submitted that the Section 31(4) of the NEPRA Act, provides that "the Authority may, on a monthly basis and not later than a period of seven days, make adjustments in the approved tariff on account of, any variations in the fuel charges and, policy guidelines as the Federal Government may issue and, notify the tariff so adjusted in the official Gazette.
While referring to this section, Qazi Ahmad Kamal submitted that in accordance with the mentioned section, the utility's monthly FCA decision should be issued by the Authority within seven days of the following month, ie the decision for the month of November, 2013 should be issued in the first week of December, 2013. Since the hearing of the FCA's request for November, 2014 was heard in May, 2014, it was a clear violation of the prescribed section as the same is time barred and therefore should not be entertained. In this regard, the Authority has observed that the FCA request is normally submitted by K-Electric by the end of third week of the following month, as K-Electric claims that it receives invoice for the power purchased from NTDC on 21st day of the subsequent month and therefore is unable to submit its monthly adjustment request within a week.
NTDC representatives in this regard submitted that due to operational difficulties, they are unable to produce invoice in the first week of the succeeding month. The Authority also noted that subsequent to the receipt of FCA's request from K-Electric, a public hearing is conducted, in pursuance of the Order of the Honourable Lahore High Court, for which an advertisement was published in the daily newspapers normally giving notice period in excess of one week to the general public to file comments in respect thereof. Afterwards, all the claims of the petitioner are verified to authenticate them. Hence, the delay, if any, is due to verification exercise carried out by the Authority and hearing to ensure participation of general public so as to reach an informed and just decision.
The information (both of self generation and power purchased from external sources) as submitted by K-Electric in its FCA request for the month was checked with respective invoices and other relevant documents by the Authority and few discrepancies were found. The fuel cost variation of K-Electric's own power generation and power purchases from external sources for the month of November, 2013 works out to be minus Rs 712.549 million or Ps 61.399/kWh. The difference between the claimed and approved variation in fuel cost of own generation is due to inconsistency in the working of furnace oil rate (Rs/M Ton) at K-Electric's end. The Authority has consistently been using monthly weighed average method to work out the furnace oil rate and has used the same for calculation of fuel charges variations.
In the fuel component of the power purchase cost, it was noticed that NTDC/CPPA, for the month invoiced K-Electric Rs 7.644/kWh and the same was used by K-Electric in its request whereas the Authority's approved energy transfer rates of NTDC/CPPA, applicable to all XWdiscos and K-Electric, for the month comes out to be Rs 7.2977/kWh. The variations have been allowed by the Authority on the basis of approved energy transfer rates.
Based on the analysis of the data as submitted by K-Electric, the Authority has noted with grave concern that K-Electric is subjecting its consumers to undue and unauthorised loadshedding by continuously underutilizing the available energy of its system (own + external). Moreover, it was also noted that K-Electric is keeping its available generation capacity idle and relying more on the energy purchased from NTDC in violation of the terms of the power purchase agreement signed between the mentioned utilities. By doing so, K-Electric is necessitating the operations of the most expensive power plants in NTDC system as well as aggravating the menace of loadshedding in the whole country. In view thereof, K-Electric is hereby directed to prudently utilise the available energy of its system and strictly comply with the terms of the aforementioned power purchase agreement to eliminate/reduce the load shedding in its territorial jurisdiction and in the whole country. In order to allow K-Electric variation in fuel cost of its own generation as well as power purchased from external sources for November, 2013, the Authority has decided to pass on minus Ps 61.399/kWh to the consumers of K-Electric as FCA. The current month's variation is being allowed on provisional basis subject to adjustments if it is found that K-Electric, while dispatching power from the generation sources of its system, has not followed the Economic Merit Order, the matter which is being dealt with K-Electric separately. The paisa per kWh, rounded off after not allocating its effect on the consumption of life line and agriculture consumers, to be charged by K-Electric in the prospective billing month of October, 2014 that works out to be minus Ps. 63/kWh and shall be charged by K-Electric. The Authority has also notified increase in tariff for October 2013 and March 2014.
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