KE’s Fuel Charges Adjustment: Consumers to bear Rs22.25bn additional burden

KARACHI: The already power-hit consumers of K-Electric will have to bear an additional financial burden of Rs22.25 billion as fuel charges adjustment (FCA) for the month of June 2022, subject to approval of National Electric Power Regulatory Authority (Nepra), under the multi-year tariff 2017-2023.

The Karachi based power company has submitted an FCA application with Nepra and urged the regulator to allow it to charge an additional Rs11.38 per unit on the consumer bills under the FCA head for the month of June 2022, citing the high fuel prices.

FCA amount for the said month stands at around Rs22.2 billion, according to KE’s plea submitted with the authority.

On the other hand, the power regulator has announced to conduct public hearing on this application on July 28, at 12:00 noon at its head office in Islamabad or through zoom.

For the hearing following issues have been framed by the Nepra authorities to be discussed: Whether the requested Fuel Price variation is justified? Whether K-Electric has followed the merit order while giving dispatch to its power plants as well as power purchases from external sources?

In a letter to Syed Safeer Hussain, Nepra Registrar, Ayaz Jaffar Ahmed, Director Finance KE said the calculation for the month of June 2022 for purchase from CPPA is based on CPPA’s requested rate for month of June 2022 and it is subject to adjustment based on determination for June 2022 to be issued by Nepra.

Moreover, instalment of GIDC arrears amounting to Rs2,425 million per month is being billed by SSGC as per Supreme Court order dated November 02, 2020. However, Nepra in its FCA decision for the month of June 2021 has stated: “considering the fact that K-Electric has obtained stay order from the Sindh High Court (SHC) in the matter and decided not to allow any amount on account of GIDC till final decision by the SHC in the matter accordingly, GIDC for the month of June 2022 will be claimed as per the final decision of the HSC in the matter.

KE dispatches as per Economic Merit Order from its own generating units (with the available fuel resources) and import from external sources. It is also certified that the cost of fuel and power purchase claim does not include any amount of late payment surcharge/ mark-up/ interest.

In the MYT, Nepra determined provisional Heat Rates for KE’s generating plants and directed KE to conduct fresh heat rate test for its plants, based on which final Heat Rates will be determined by Nepra.

In this regard Nepra has issued its decision on Heat Rate for BQPS—II plant on January 1, 2020 and accordingly the calculations are based on Heat Rates determined therein.

With respect to heat rate of KGTPS, Nepra issued its determination on January 18, 2021 against which KE filed review motion. Nepra issued its decision on the review motion on November 05 2021. Calculations for the month of June 2022 are based on Heat Rates determined therein with request to adjust the impact of prior period in the pending quarterly tariff variation.

The letter said KE has already incurred the costs of June 2022. Considering FCA for June 2022 has a significant impact on our cash flows and working capital position of the company is already strained due to exorbitant fuel prices.

KE has request the authority to process and approve the FCA for June 2022 at the earliest and allow KE to charge the FCA for June 2022 in August 2022. Further the Power Company has request Nepra for expeditious processing of pending quarterly tariff variations for the period January 2022 to March 2022.

Copyright Business Recorder, 2022