NEPRA Approves Massive Hike in K-Electric Power Tariff

The National Electric Power Regulatory Authority (NEPRA) has approved a Rs. 2.87 per unit hike in K-Electric tariff on account of quarterly adjustments. The decision follows K-Electric’s request for a Rs. 5.170 per unit increase for the third quarter (Jan to March) of FY2022-2023.

NEPRA calculated a quarterly adjustment of Rs. 3.37 per unit. However, considering the reversal of the previous quarter amounting to Rs. 0.5055 per unit, the net impact of the electricity rate increase is Rs2.8680 per unit.

Second Increase for Q3 FY2022-2023

This marks the second approved increase on account of quarterly adjustments, with the previous approval of a Rs. 1.25 per unit hike by NEPRA. The decision stems from a public hearing held on May 31, 2023, regarding K-Electric’s petition for tariff adjustment.

Key Points from the Decision

• K-Electric’s claimed cost for energy purchased from the national grid is Rs. 19,646.42 million, including capacity charges and variable O&M.
• An amount of Rs. 8.143 million is allowed for the revision in market operator fee rates for the quarter July 2022 to December 2022.
• K-Electric claims Rs. 1,142 million for the impact of negative FCA for July 2022, now passed on to residential consumers up to 300 units.
• NEPRA adjusts a negative amount of Rs. 1,130 million for the requested adjustment of tax on undistributed reserves for FY 18 and FY 19.
• Approval is granted for the cost of Insurance Premium of around Rs. 9.727 billion, covering Chinese and German components.
• NEPRA condones the delay in filing K-Electric’s request and allows the premium paid to Sinosure and Euler Hermes as a separate cost.
• An amount of Rs. 9.146 billion is allowed to K-Electric as the cost of debt-insurance premium in the instant quarterly adjustment.

Calculation Adjustment based on Actual Units

K-Electric’s request for quarterly adjustment was based on projected units to be sold in the next quarter. However, actual sent-out units for April to June 2023, adjusted for allowed losses, are 4,458 GWh.

Inclusion of BQPS-I Unit-3 Operation Cost

The cost of operation of unit-3 of BQPS-I, previously deducted by the Authority, is included in the instant quarterly adjustment.

Next Steps and Statement from K-Electric

The decision is pending final approval the federal government under Proviso (ii) of Section 31(7) of NEPRA Act before its official notification is issued by NEPRA. Meanwhile, K-Electric has stated that, under the Uniform Tariff Policy, the QTAs impact is generally not passed on to customers, with a formal decision expected from the government.