Inside Financial Markets

Nepra allows 25 paisa increase in KE November tariff

National Electric Power Regulatory Authority (NEPRA) has approved 25 paisa /kWh addition to the consumers bill under Fuel Charges Adjustment (FCA) for the month of November 2016 after K-Electric sought approval of 60 paisa /kWh under FCA. Business Recorder has a copy of the NEPRA’s judgement that says: “The adjustment will be applicable to all the consumer categories except lifeline consumers of KE.

The said adjustment shall be shown separately in the consumers’ bills of January 2017 on the basis of the units billed for November 2016. This adjustment is on provisional basis and will be adjusted/refunded once the new tariff of K-Electric is determined and notified.” K-Electric had submitted its provisional FCA request on December 15, 2016 in which it said that cost of fuel in generation and power purchase that KE claimed, didn’t include any amount of late payment surcharge/mark-up or interest. K-Electric also submitted that it dispatches power as per Economic Merit Order (EMO) from its own generation units (with the available fuel resources) and import from external sources.

The control period of the determination dated December 23, 2009 has expired in June, 2016 and the petition for new Multi Year Tariff (MYT) has been filed by K-Electric which is under proceedings before the Authority.

K-Electric has stated that the submissions made in its subject FCA request are provisional and in case of any adjustments, revised petition will be filed, accordingly. According to the judgement NEPRA decided to initiate the FCA proceedings to ensure that K-Electric recovers its legitimate costs in a timely manner. However, the allowed adjustments shall be provisional, subject to adjustment based on new tariff and corresponding mechanism to be determined through new MYT petition of K-Electric.

Since the impact of FCA, if any, directly affects the consumers of K-Electric, therefore, the NEPRA decided to provide an opportunity of hearing, to arrive at an informed and just decision, based on the comments/views/opinions of all the stakeholders. The hearing on the subject matter was held on December 27, 2016 at NEPRA Tower, Islamabad.

During the hearing, K-Electric submitted that the claimed variation was due to the increase in per unit weighted average fuel cost of generation in Bin Qasim Power Station (BQPS-I) from Rs 7.553/ kWh in the month of September, 2016 to Rs 8.612/ kWh in

November, 2016. The aforementioned increase has occurred due to an increase in weighted average price of furnace oil from Rs 30,520/ metric ton in September, 2016 to Rs 34,571/ metric ton in November, 2016.

Major reason of the claimed variation is the increase in fuel cost of power purchase from 4.458/kWh in the month of September, 2016 to Rs 5.335 /kWh due to increase in fuel costs of all the external sources. The information (both of self-generation and power purchased from external sources) submitted by K-Electric vide FCA request for the said month was verified with respective invoices and other relevant documents. Few deviations were noticed.

The fuel cost variation of K-Electric’s power generation and power purchases from external sources for the month of November, 2016 worked out to be Rs 303.092 million or Ps. 25. 096/ kWh. The difference between the requested and approved variation in fuel cost of generation is due to inconsistency in the working of furnace oil rate (rupees/metric ton) by K-Electric. The Authority consistently uses monthly weighted average method to work out the rate of furnace oil consumed in BQPS-I and the same has been used in calculation of fuel charges variations of the current month.

The difference between the requested and approved variation in power purchase cost from external sources is due to the reason that K-Electric in its request has used provisional fuel cost component of Central Power Purchasing Agency Guarantee Limited (CPPA-G) whereas the Authority has taken into account the fuel cost component of CPPA-G, approved for ex-WAPDA Distribution Companies (XWDISCOs). The judgement concluded that in view of the discussion in preceding paragraphs, the NEPRA decided to pass on Ps. 25/kWh to the consumers of K-Electric as FCA for the month of November, 2016.

Baqar Hussain

A Wannabe CFO, just had stepped in the corporate sector, willing to explore every aspect here and learn as mush as i can, awareness for those who dont, get the info where ever possible and stay up to date always.

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