ISLAMABAD: The National Electric Power Regulatory Authority (NEPRA) will conduct a public hearing on Thursday (May 9) to decide a petition submitted by K-Electric (KE) regarding provisional monthly fuel charge adjustments (FCA) for the period of July 2023 to March 2024. KE in its request has sought on provisional basis for January 2024, in which it presented three scenarios of FCA adjustment, ie, Rs 3.34 per unit, Rs 3.78 per unit and Rs 8.78 per unit,
Power utility company has calculated FCA adjustments under three scenarios which are as follows: (i) FCA calculated as the difference between Actual fuel cost vs the Reference monthly fuel cost as given in interim tariff. (FCA – Ref Interim Tariff). Under this method, monthly FCAs are calculated by comparing actual monthly fuel cost against reference fuel cost as approved by the Authority in KE’s FCA Decision for the month of March 2023. The reference fuel cost is grossed up on units served level with the monthly transmission loss of March 2023; (ii) FCA calculated as the difference between Actual fuel cost vs the Reference monthly fuel cost (FCA – Ref Monthly Cost).
Under this method, monthly FCAs are calculated by comparing actual monthly fuel cost against each monthly reference fuel cost. The monthly references for fuel cost are based on the projected units sent out for each month for FY 2024 and based on these monthly sent out weightages, K-E will be allowed a determined tariff incorporating a single weighted average rate of Fuel Cost. K-E has highlighted that as the proposed base tariff will include yearly average fuel cost as reference, whereas for the purpose of FCA the monthly reference would be used instead of yearly average, it will result in a systematic over/under recovery of cost and incurrence of working capital cost which would require adjustment in tariff; and (iii) FCA calculated as the difference between actual fuel cost vs the annual weighted average reference cost (FCA – Ref Yearly Average Cost).
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Under this method, the monthly FCAs are calculated by comparing actual monthly fuel cost against weighted average annual reference fuel cost. Here the reference fuel cost will align with the yearly average fuel cost allowed in the determined tariff, and there will be no systematic under/over recovery of costs or additional working capital implications.
However, KE is of the view that the expected impact of proposed FCA will be up to Rs 2 per unit as compared to the average FCA of Rs 2.89 per unit applied to customers of other distribution companies for the same period.
KE has filed FCA based on three scenarios and has requested NEPRA for approval of any of the three scenarios. The Authority will provide guidelines for the timely recovery of the FCAs and issue a subsequent notification clarifying the specific method implemented and its impact on customer bills. FCAs are a standard procedure for utilities, reflecting changes in generation mix and fluctuations in global fuel prices used for electricity generation. Individual Distribution Companies cannot determine the FCA or make unilateral changes.
Copyright Business Recorder, 2024
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