System constraints: KE says unable to get more than 2,000MW from national grid

ISLAMABAD: K-Electric on Thursday stated that it is unable to acquire more than 2,000 MW of power from the National Grid due to system constraints. During peak hours, the company is forced to operate its own power plants, and the cost of this operation must be absorbed by someone.

This statement was made by KE officials during a public hearing at the National Electric Power Regulatory Authority (Nepra) regarding the power utility’s request for a negative adjustment of Rs 4.84 per unit for January 2025. The adjustment aims to refund Rs 4.695 billion to consumers.

Additionally, KE sought an adjustment of a part of Rs 6.10 billion, which pertains to the accumulated actualization of fuel costs resulting from partial load operation, open cycles, degradation curves, and startup costs from July 2023 to January 2025, to be covered by negative fuel cost variations.

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In January 2025, out of total power sale of 1300 MW, 1170 MW came from the National Grid which was around 90 per cent sent out. KE’s own generation was just four per cent.

The Authority was informed that KE has received Rs 804 billion from the federal government as a Tariff Differential Subsidy (TDS) from 2006 to 2025, due to the uniform tariff policy across the country.

An amount of Rs 13.5 billion remains pending for the period from July 2023 to January 2025, of which Nepra has already set aside Rs 7.4 billion in its decisions for November and December 2024.

Interveners from Karachi, including Rehan Jawed from KAPT, Tanveer Barry from KCCI, Arif Bilwani, and an Aptma representative, opposed KE’s request for a negative FCA adjustment. They urged the Authority to pass on the entire benefit of the negative FCA to Karachi’s consumers.

KE’s demand in January 2025 was reduced by 8% compared to January 2024, primarily due to slower industrial growth amid economic challenges and the rise of net metering.

Tanveer Barry argued that when power plants operate at partial load in an open cycle, their efficiency generally decreases, leading to higher fuel consumption per unit of electricity. Given that KE has not operated in these modes due to system constraints, the additional fuel cost may not be justified. He also pointed out that frequent plant startups increase fuel consumption, as power plants require extra fuel during ignition and ramp-up.

“A detailed regulatory analysis is needed to determine if KE had prior knowledge of these inefficiencies and whether they were factored into previous fuel cost projections. If KE is using this adjustment to cover operational inefficiencies, the FCA request should be reconsidered,” Barry added.

Barry further emphasized that NEPRA’s own regulations state that adjustments should be based on audited and verified data, and that NEPRA is approving these deductions without proper auditing. He called for a defined margin for open cycle and startup costs, which KE repeatedly covers through FCA adjustments.

Nepra Member (Tech) Rafique Ahmad Shaikh raised several questions, including why KE is unable to take 1,600–1,700 MW from the National Grid.

KE’s Abbas Hussain responded that the utility is currently optimized at 1,600–1,700 MW, but its demand reaches 2,300–2,400 MW for six to eight hours, compelling KE to operate its own power plants, which adds to the mix. He also mentioned ongoing talks with NTDC to increase supply from 1,600 MW to 2,000 MW.

“As NTDC’s 500 kV circuit is completed in the next two months, KE will be optimized to 2,000 MW, which will also improve the generation fuel mix,” he added.

According to KE, these costs may require adjustments during peak summer months. The company aims to prevent excessive financial burdens on consumers, as electricity consumption and bills typically rise during this period.

KE’s Chief Executive Moonis Alvi, reiterated the company’s position on interconnections with the national grid, emphasizing additional connections would only be viable with a firm commitment of increased supply from NTDC. “The NTDC will supply 1,200 MW to KE on a firm basis, with an additional 1,000 MW subject to availability,” he stated.

NEPRA reaffirmed that cost verifications would remain a top priority and verified claims would be passed on to consumers. NEPRA has reserved its decision and will issue a verdict after reviewing the data and submissions presented by KE during the hearing.

The representative of FFBL power company sought visibility of KE’s economic merit order so that they are aware when their plant was higher on the merit order as compared to KE’s own plant.

Copyright Business Recorder, 2025