Negative adjustment of Rs357m in QTA: Nepra puts its decision on KE’s request on hold

ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) on Thursday decided to hold decision on K-Electric’s request of negative adjustment of Rs 357 million in QTA to make it part of its new tariff which is under consideration.

The Regulator further stated that the power utility company should be provided electricity from the National Grid if surplus capacity is available in the grid.

The Authority comprising, Chairman Waseem Mukhtar, Member (Technical), Engr. Rafique Ahmad Shaikh, Member (Licensing), Engr. Maqsood Anwar Khan, Member (Technical & Finance), Mathar Niaz Rana and Member (Law), Amina Ahmed officiated two public hearings. One was related to KE’s Power Acquisition Program (PAP) for 2024-30 and QTA adjustment for fourth quarter April-June 2023.

Interveners from Karachi, Arif Bilwani, Tanveer Barry and Aneel Mumtaz raised different questions on both petitions of K-Electric.

Power sector planning critical to sustainability

Initially, the KE had sought positive adjustment of RS 3.217 per unit for fourth quarter of 2022-23 but later revised its request for positive adjustment of RS 12.815 billion to be made part of multi-year tariff which is under consideration.

The KE in its revised QTA adjustment request sought negative adjustment of Rs 1.243 billion on account of O&M and capacity purchases, Rs 1,069 billion as uncovered cost of FCA due to no adjustment of T&D losses, negative adjustment of Rs 2 million on account of net impact of life line, 300 units and agriculture units and negative adjustment of Rs 180 million as other adjustments. The cumulative impact has been calculated at – Rs 375 million.

The KE also sought Rs 16.264 billion as write off for FY 2023, decision on which will be taken later on as decision on previous write offs is also withheld.

Arif Bilwani who is also shareholder of KE accused the power utility company of making up “stories” for the last two decades, urging Nepra to first go through previous capacity expansions of KE and then take a final decision; and pposed write off of Rs 16.264 billion to KE.

Tanveer Barry Vice President KCCI said that KE commissioned 900 MW Bin Qasim then why is KE insisting on retired power plants.

Those plants which have ended a useful life and are inefficient should be retired. KE fails to sign GSA with SSGC resulting in expensive electricity for Karachi. K2 and K3 is closed which are efficient plants but “our bad luck” is that we are dependent on inefficient plants.

He said, in the past quarterly adjustments were usually not passed onto consumers and were subsidized by the government but now Karachi is paying a uniform quarterly adjustments @ 10/per unit, including taxes. Industry is already paying high tariff, Rs 7 billion for incremental consumption which has not been released yet as KE has not given any adjustment against the committed Rs 7 billion so far.

Capacity payments more than doubled from 1082 billion rupees to 2153 billion rupees per unit, and capacity charges have increased from Rs 10/unit to Rs 19/unit.

KE team noted that BQPS-1, Tapal and Gul Ahmad plants will be replaced with cheap electricity after which basket price will reduce by cents 1.5 per unit. The KE intends to add 2600 MW additional capacity in the system through interconnections and Power Procurement Agency Agreement (PPAA) tentatively from Jamshoro coal power plant and Discos.

Chairman Nepra said that the KE’s investment plan is under consideration as all decisions are taken after thorough deliberations.

Citing comments of CPPA-G and NPCC, Chairman Nepra said that in case surplus capacity is available in the national grid, additional supply to the KE will reduce capacity charges and reduce basket price of the KE.

The KE team stated that all proposed wind and solar projects are to be procured under the Competitive Bidding regime. Negotiated procurement for projects is in compliance with Regulation 30 of the Procurement Regulations that allows small-scale generation connected directly to the distribution system at the distribution voltage.

Land for the proposal of 18 MW Solar Projects is already available and hence projects can be commissioned on fast-track basis with integrated COD FY-25. The tariffs of these projects are competitive and will reduce KE’S basket price.

The KE has proposed two new projects under negotiated procurement which constitutes only 33MW out of total 1,282MW.

The proposal for the 18 MV/Solar project from K-Solar is also considered under negotiated procurement for following reasons: (i) regulation 30 of the Procurement Regulations does not restrict KE from such a transaction; (ii) availability of multiple small land projects within existing KE Grids and therefore K-Solar has offered to install a solar plant within the available area and connect it to 11.

This facility will be established on a fast track basis that will provide economic benefits to the consumers.

The Power Acquisition Program was submitted with the regulator in early 2023 and complements KE’s PKR 484 billion Investment Plan to bolster KE’s transmission and distribution infrastructure.

Focused on enabling access to affordable energy for all, the PAP prioritizes a gradual integration of renewable and indigenous power sources up to 2,200 MW. This includes solar, wind and also hydel projects which will channel electricity towards Karachi under the wheeling regulations prescribed by the NEPRA and Government of Pakistan.

It is anticipated that with a sustained growth of 2% per year, Karachi’s peak demand could touch 5,000MW by 2030 and will cater to the power needs of 5 million customers. The company’s efforts are to make the share of renewable energy comprise 30% of its generation mix.

To actualize these power projects, KE is engaged with various stakeholders including the World Bank, Sindh Energy Department, Government of Balochistan, and other large scale power sector developers.

Copyright Business Recorder, 2023