The Authority also approved monthly fuel price adjustment of six months, the financial impact of which will be Rs 1 billion negative on the consumers. According to data, KE sought Rs 1.377 per unit for quarter April-June 2019 and Rs 1.444 per unit July-Sep 2019. KE also claimed gross write-offs of Rs 10.850 billion for the FY 2018-19 due to increase in gas prices and furnace oil. The power utility also sought a three-month positive adjustment in FCA and a three-month negative adjustment.
Giving the background, KE team stated that the Authority determined K-Electric's Multi- Year Tariff (MYT) determination for the period from FY 2016-17 to FY 2022-23 on March 20, 2017. Motion for leave was filed against the decision of the Authority. The decision on Motion for Leave was decided by the Authority on October 9, 2017. Subsequently, the federal government, under section 31 of the Nepra Act, filed its reconsideration request which was decided by the Authority on July 5, 2018 which was notified on May 22, 2019.
Pursuant to the process, KE filed adjustment requests for monthly fuel price for the period July 2019 to December 2019 and quarterly adjustment requests on account of PPP, indexation of O&M Costs, adjustment of T&D losses etc. from April to June 2019 and July to September 2019.
In addition KE, in a letter on January 10, 2020, also raised certain issues on the decisions of the Authority regarding FCA and quarterly adjustment of December 27, 2019 and December 30, 2019 respectively. KE raised the following issues and requested to allow those costs in its upcoming quarterly determinations: (i) cost of KANUPP; (ii) capacity cost of SNPC Iⅈ (iii) average sale rate; (iv) adjustment for negative FCA for certain categories; (v) WFFP of FPCL; (vi) capacity cost STDC; and (vii) write offs.
During the course of hearing, Nepra's technical team said that the financial impact of quarterly adjustment will be at Rs 11 billion whereas other costs at Rs 3 billion, totaling it to Rs 14 billion.
Arif Bilwani and seven Associations had raised objections on the hearing in Islamabad instead of Karachi and did not attend the hearing. In reply to a question, the representative said the KE's current shortfall is around 500MW at peak hours. He said despite establishment of coal and RLNG power plants, KE would face a shortfall of 1400 MW in 2023. KE had also planned other projects but there is a sense in the government that since there is surplus in national grid, KE should start off-taking electricity from the national grid.
"KE and government are in talks on 1400MW electricity from national grid and for this purpose a study is being done which will be concluded at the end of the current month which would determine how much quantum KE could off-take and from where," he said
The KE representative was of the view that whatever electricity the power utility has to get from the plants in Karachi, there should be an inter-connection facility as the current inter-connection facility is operating at its optimum capacity and cannot bear an additional burden. The construction of new inter-connection is three years as 500 KV grids are to be established.
"If we finalise agreement and decide today to start work, it will take three years time to complete the inter-connection after which off-take from national grid will start," he added.