Senate Standing Committee on Finance was informed that National Electric Power Regulatory Authority (NEPRA) has initiated legal proceedings against K-Electric for its alleged failure to implement the Performance Standards which led to frequent tripping/interruptions in supply of power. Sources said that a brief submitted to the Senate Standing Committee on Finance presided over by Senator Saleem Mandviwalla on Wednesday states that there has been frequent tripping/interruptions in supply of power by KE which constitutes failure to implement the Performance Standards in letter and spirit.
The NEPRA initiated legal proceedings by issuing a show cause notice to KE on 13.1.2015 for punishment and imposition of fine up to Rs 100 million. The committee was informed that as part of the consumer protection measures, the regulator took cognisance of a news item of over-billing of 50 units across the board to all consumers by K-Electric. After investigation of the issue, management of KE was held responsible for over-billing and consequently legal proceedings were also initiated for punishment and imposition of fine under Nepra Fines Rules, 2002. The company was issued a show-cause notice for imposition of fine up to Rs 100 million to KE. However, KE challenged the regulator's action in the court and the court suspended the operation of show-cause notice and also restrained Nepra from passing final decision without the consent of the court. In addition to that, KE also filed a contempt application and defamation suit for damages against all members and Chairman Nepra.
The fact of undue charging of meter rent from the consumers by KE was also taken up by Nepra and a fine of Rs 10 million was imposed on KE. The regulator's decision was again challenged by the company in the court which restrained Nepra from taking any coercive action against KE. Additionally, a number of complaints were filed by the consumers of KE before the Nepra with respect to charging undue bank charges by the company. The Nepra had restrained KE from hank charges to the consumers and also ordered to refund of the amount already collected from the consumers.
The committee was also told that the company was found involved in underutilization of its generation capacity, undue load shedding and severe power breakdowns in the year 2009. As a result, the company was imposed a fine of Rs 300,000 by the regulator. The event of underutilization was again repeated by KE in the year 2013 and proceedings were initialled against the company by issuing a show cause notice for imposition of penalty of up to Rs 100 million. However, KE challenged the actions of Nepra before Sindh High Court. The Court suspended the show cause notice and restrained Nepra from passing final order without permission of the Court. The proceedings are still pending sub judice. Analysing energy data provided by the KE for the period July-September 2013 also purportedly reveals that the KE utilised on average 95% agreed capacity from National Transmission and Dispatch Company (NTDC) while keeping its own resources idle to the extent of 36%. The action of the company also invited legal proceedings by the regulator for violation of Power Purchase Agreement executed between KE and NTDC for withdrawal of 650 MW from National Grid.
However, KE and some other entities approached the Court and obtained orders for uninterrupted supply of 650 MW to KE by NTDC. Though, Nepra was not made party to the proceedings but to ensure equitable distribution of electric power and to bring the correct facts in the knowledge of the court, Nepra filed an application for becoming a party. The Nepra submitted details of financial impact/undue benefit drawn by KE as a result of withdrawal of 650 MW from National Grid at subsidised rates as well as non-generation of KE through its own resources. In addition to that, Nepra issued directions to KE and NTDC to strictly observe the applicable provisions of their PPA For withdrawal of 650 MW and also wrote an advisory to Secretary Ministry of Water and Power, to take necessary remedial and corrective measures. The meeting was further informed that Nepra applied Claw-Back Mechanism for the Financial Years 2011-12 and 2012-13 and passed a benefit of around Rs 5.5 billion to the consumers out of profits of KE, which was challenged by the company in the court. However, Nepra defended its decision and finally the Court rejected the stance of KE and allowed Nepra to pass on the benefit to the consumers.