ISLAMABAD: National Electric Power Regulatory Authority (NEPRA) has allowed Karachi Electric (KE) to recover Rs 1.910 billion from consumers at the rate of Rs 1.0751 per unit for October 2021, under monthly FCA mechanism.

The regulator unveiled its determination on Tuesday on the petition of KE. The regulator conducted the public hearing on November 30, 2021.

The increased FCA will be recovered in the bills of January 2022. It shall be applicable to all the consumer categories except lifeline consumers.

According to the determination, KE filed its monthly FCA request for October 2021. K-Electric initially requested Paisa 29 per unit in FCA for October to recover Rs 516 million from consumers.

Subsequently, K-Electric, in its letter of December 01, 2021, submitted its revised request, pursuant to hearing held on November 30, 2021 in the matter of FCA of Discos for the month of October 2021. K-Electric in its revised request used the updated rate of energy purchased from CPPA-G, i.e., Rs. 9.9165/ kWh as presented during Discos FCA hearing, instead of previously used fuel rate of Rs.7.4052/kWh. Accordingly, K-Electric submitted its revised FCA request as follows: (i) October 21, original – Paisa 29 per unit to recover 516 million; and (ii) October revised- Rs 1.383 per unit to recover Rs 2.457 billion from consumers.

While going through the data/ information provided by K-Electric regarding fuel cost of energy purchased from external sources, the Authority’s observations were as follows: (i) the Authority observed that K-Electric has been asked to provide CV test reports for both Tapal and Gul Ahmed for each month from their fuel suppliers, by third party and also from their own labs. Any adjustment in this regard, if required, would be made in the upcoming adjustments request of K-Electric;(ii) regarding cost of energy purchased from CPPA-G during the month of September 2021, K-Electric has used the rate of Rs.9.9165/kWh 2021; however, the Authority’s approved fuel cost component in the matter of Discos for the month of October 2021 is Rs.9.9179/kWh.

In view thereof, while working out the instant FCA of K-Electric, rate approved by the Authority for Discos for October incorporated for the energy purchased by K-Electric from CPPA-G during October 2021. This has resulted in increase in total fuel cost by around Rs. 1.08 million;(ii) The Authority in its decision of June 04, 202 1, based on the heat rate tests conducted for SNPC and SNPC-II, revised their net capacities and heat rates. The Authority revised the net capacity and heat rate of SNPC-I as 5 1.154 MW and 8194.25 Btu/ kWh - net HHV equivalent to 41.90% efficiency. Similarly, net capacity and heat rate of SNPC-II have been revised as 51.526 MW and 8143.699 Btu/kWh - net HHV equivalent to 41.64% efficiency. The Authority afterwards in its decision of September21, 2021, granted interim relief to SNPC and SNPC-II, in relevant tariff components, i.e., Fuel Cost components and capacity charge components of generation tariff, on account of revision in heat rates and net capacities. As per the decision of September 21, 2021, FCC of both SNPC and SNPC-II have been revised as Rs.4.097 1/kWh and Rs.4.0718/kWh, respectively, based on the revised heat rates and reference gas price of Rs.500/mmbtu;(iii) further, while working out the FCA of October 2021, the Authority has used FCC of Rs.6.6994/kWh for both SNPC and SNPC-II, as approved by the Authority on November 20, 2020. Any adjustment in this regard would be made subsequently, once the Authority approves the revised FCC of both SNPC and SNPC-II based on revised heat rates and revised gas prices.

The Authority, during the hearing observed that prima facie, certain efficient power plants were not fully utilized and instead energy from inefficient sources was generated. The Authority observed that both KGTPS and SGTPS were not operated by K-Electric to their fall capacities, and also less energy was drawn from NTDC during certain hours, without reducing generation from expensive plants connected to its network. Similarly, KCCPP was also operated on HSD.

The Authority carried out an in-house analysis of the data provided by K-Electric for the month of October, 2021, to work out the financial impact due to deviation from EMO. The instances and events were shared with K-Electric for provision of clarification/ justifications, and K-Electric was asked for the reasons in this regard.

During the analysis, the main reason for EMO violation was observed to be “less drawl from NTDC/ Simultaneous Operation of Expensive Plants”. It was observed the K-Electric had drawn lesser energy from NTDC during certain hours, without reducing generation from expensive plants connected to its network. Accordingly, the financial impact due to the EMO violation events with respect to lesser drawl from NTDC, wherein KE has failed to provide satisfactory response, amounts to Rs.5.96 million.

Regarding the financial impact due to underutilization of efficient plants on account of lower gas pressure, a letter was issued to KE on September 16, 2021, whereby, it was directed to resolve its gas pressure/ availability issues within thirty days.

In response, K-Electric has informed that it is in the process of resolving the lower gas pressure issue; however, there are certain meetings with stakeholders that will take place in due course of time. K-Electric also requested NEPRA to be part of meeting with stakeholders, for early resolution of the low gas pressure issue. In view thereof, the Authority has decided to provisionally allow the cost on account of low gas pressure issue to K-Electric and grant time to K-Electric to finalize its meetings with the relevant stakeholders, before deducting the amount on account of lesser generation due to low gas pressure from the claim of K-Electric. Accordingly, for the purpose of instant FCA of October 2021, the amount of Rs.5.96 million only, has been withheld from the claim of K-Electric.

Hearing was held on November 30, 2021.

The Authority has approved FCA of Rs. 1.0751/kWh for the month of October 2021 having an impact of Rs. 1.910billion, to be recovered in the bills of January 2022.

Copyright Business Recorder, 2021