After tariff fixation: KE will see no net impact from FCA, says regulator Nepra

ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) on Thursday said the impact of Fuel Charges Adjustment (FCA) on K-Electric will even-off after determination of its tariff which is in its final stages.

This was announced by Nepra Chairman Waseem Mukhtar, in reply to a question during a public hearing held to consider FCA adjustment request of KE, in which the latter sought Rs 3.09 per unit from consumers to recover additional amount of Rs 6.206 billion for July 2024. The Authority did not raise any question on the requested amount of positive adjustment through FCA, which implies it will be allowed after verification of data.

Mukhtar further said that the current FCA’s adjustment request is on provisional basis as its multi-year tariff period expired in June 2023 which is why it is positive, unlike Discos, but as its new tariff is approved KE’s tariff will also be adjusted.

Levy of Rs3.09/unit FCA: KE seeks Nepra’s approval

He, however, clarified that subsidy is a policy decision which is the government’s domain adding that the Regulator’s responsibility is to determine true cost of generation.

Representatives of different segments of consumers, like, Tanveer Barry, Rehan Jawed, Arif Bilwani, Imran Shahid, Jamaat-e-Islami and Anil Mumtaz expressed their anger at the overall performance of power sector, and Rs 3.09 per unit FCA adjustment for KE’s consumers which is hitting industry and all other consumers. Operations of two power units of KE i.e. BPQS-I and BPQS-II also came criticism as their life has already expired.

Tanveer Barry stated that the step motherly treatment to Karachi consumers must be stopped. Arif Bilwani suggested that since KE’s own generation is expensive, it should be supplied electricity from government power plants established in Karachi or nearby so that cost of electricity may be reduced. In July, KE’s own generation was at Rs 28.45 per unit whereas cost of CPPA-G electricity was Rs 9.919 per unit.

Briefing the Authority on renewable energy projects, CEO, KE, Syed Moonis Abdullah Alvi said that Master Textile Mills Limited submitted lowest bid for 50 MW Winder and 100 MW Bela Solar Project (Rs 11.6508 per unit for Winder and Rs 11.2071 per unit for Bela). Bid evaluation report is under preparation for submission to NEPRA.

However, bid submission deadline has been extended for 120 MW at Deh Malkani and 150 MW at Deh Metha Ghar Solar till September 30, 2024. Extension is granted to allow for measurement of technical parameters following the change in site coordinates by Government of Sindh.

Clarification process of 200 MWp site neutral hybrid (wind and solar) project has concluded and approved project clarifications have been shared with the bidders and uploaded on KE website. Bid submission deadline for the project is August 31, 2024.

Moonis Alvi requested the Authority to also approve transmission line for these projects as it will be completed in 25 months.

According to KE for the calculation of FCA of July 2024, CPPA’s fuel cost for July 2024 is based on CPPA-G’s requested rate for July 2024 and subject to actualization based on Nepra’s decision. Monthly FCA for July 2024 has been calculated based on March 2023 as the interim tariff reference for consideration of the Authority.

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

The data shared with Nepra shows that KE’s reference was based on sent out cost of 1,478 GWh at Rs 15.99 per unit projected on the KE’s own cost of fuel, Rs 13.504 billion and cost of fuel of external purchases at Rs10.135 billion, totaling Rs 23.638 billion. However, actual data indicates that cost per unit sent out was Rs 19.08 per unit in July 2024 as total cost of fuel was Rs 14.730 billion - higher than reference cost due to KEs’ own fuel cost.

The data shows that the KE’s own fuel cost was Rs 28.449 billion in July 2024 against projected cost of Rs 13.504 billion. However, cost of fuel of power purchase from external sources was Rs 9.919 billion against reference of 10.135 billion, showing a decrease of Rs 0.216 billion.

Total cost of fuel was Rs 38.368 billion against projection of Rs 23.638 billion. KE sent out units were 2,011 GWh against reference sent out units of 1,478 GWh which was 73.5 per unit higher than the projections due to hot summer in Karachi.

Copyright Business Recorder, 2024