Interest on security deposits: K-Electric 'quietly' stops discharging accrued amount to consumers

The K-Electric has 'quietly' stopped discharging five percent interest rate per annum over the amount collected from the consumers on account of security deposit, it emerged on Tuesday. Sources said that the power utility had been adjusting 5 percent interest rate in the consumers' electricity bills for the last 27 years; however the present management without taking appropriate approval from National Electric Power Regulatory Authority (Nepra) and Securities and Exchange Commission of Pakistan (SECP) stopped discharging the said amount to the consumers since financial year 2011.
It's pertinent to mention here that K-E in its annual report admitted to have discharged 5 percent interest rate to the consumers on Rs 4.33 billion total collected amount as security for energy dues from them in 2011. This amount had gone up to Rs 4.75 billion in 2012, but the power utility did not give the profit to consumers. In its annual financial report 2012 it has mentioned that "the security for energy dues and carrying interest at the rate of Nil percent per annum." Such deposits are payable at the time when electricity connection of consumer is permanently disconnected after adjustment thereof against an amount receivable from the consumer at the time of disconnection, it added.
The amount of security deposit is trust money of consumers submitted with KE which can be taken back at anytime, sources added. "The amount of interest may have gone up to more than Rs 1.5 billion but KE has retained the same with itself," they added.
While elaborating they said that trust money can not be used by the organisation which has taken from the owner. If there is any benefit to be derived then it should go to the owner," they said. Chairman, Consumer Association of Pakistan Kaukab Iqbal said that the interest on security deposit was due right of a consumer who has submitted his money with KE. The company should review and adjust the said amount in users' bills as per previous practices instead of retaining it for three years.
KE may take administration charges out of the collected amount under the same head, but it would be gross injustice with the poor consumers to keep the whole amount with it, he said. "We will register complaint in Nepra if the power utility did not pass on the amount to citizens," he warned. On the other hand, a KE spokesman said that since KE being licensed and regulated by NEPRA ws governed by the provisions of the NEPRA Act and the Consumer Service Manual (CSM) issued thereunder. There is no requirement under the NEPRA Act, Rules and Regulations for distribution companies to pay interest on security deposits as the same is merely advance payment against current and future billing and KE is not liable in law for such payment.
Since no other DISCOs are paying interest on security deposits, therefore KE was well within its rights to discontinue its earlier practice of paying interest on security deposits. The spokesperson further said that if there was no requirement from NEPRA for KE to do this, then they were within legal boundaries.