The National Electric Power Regulatory Authority (Nepra) confirmed on Wednesday that an additional monthly fuel cost of roughly 97 paise per unit will be recovered from K-Electric customers starting next month.
Although it put the final decision on hold for a couple of days, it did so in order to cross-examine some new facts they had obtained from K-Electric. It is necessary to make an additional fuel cost adjustment (FCA) because the price of power in the month of August has increased significantly.
In August, a public hearing was held on a petition submitted by K-Electric, which was presided over by the company’s Chairman, Nepra Tauseef H. Farooqui. When asked about the high cost of power generated in August, the regulator stated that it was due to the usage of expensive fuel and that efficient plants were not being used to their full capacity. A number of members from Sindh and Khyber Pakhtunkhwa were also present, including Rafique Shaikh and Maqsood Anwar Khan.
In its petition for a 98-paisa per unit increase in power tariff under the monthly FCA, the company stated that the cost of electricity had increased due to a shortage of natural gas, which had resulted in power plants being operated against the merit order and on imported furnace oil, which had increased the cost of electricity.
According to the Nepra case officers, the K-Electric petition demonstrated that 14 percent of the electricity was generated using RFO, resulting in higher generating costs for the company. They claimed that K-Electric had breached the merit order for electricity generation, which was maintained by the Ministry of Energy, resulting in a burden of Rs943 million being borne by consumers. In the case of low gas pressure, an additional cost of Rs618 million was incurred, while the use of costlier power sources resulted in an additional cost of Rs325 million.
According to the regulator, K-Electric must settle the natural gas supply issue with Sui Southern Gas Company (SSGC) within a specified time frame, failing which a fine will be levied against K-Electric in future FCAs.
Officials from the Karachi Electricity Authority (KEA) stated that the National Transmission and Despatch Company (NTDC) was not providing more than 1,100MW to Karachi. According to them, furnace oil was responsible for producing approximately 14 percent of the electricity. They also stated that efficient power plants could not be completely utilized when there was low gas pressure in the atmosphere.
Observing that the corporation was generating expensive electricity from its own power plants, the chairman of Nepra inquired as to why it was not able to obtain comparably cheaper electricity from the national grid. He ordered the electric provider to produce a written response on the matter within three days, and if the regulator was displeased, he threatened to lower the utility’s equivalent cost.
According to the KE, the essential increase in FCA was also necessitated by an increase in RLNG prices. The regulator saw that more efficient power plants were not being utilized to their full potential. Amir Ghaziani, Chief Financial Officer of KE, stated that the more efficient units were unable to run due to low gas pressure. He stated that the KE was making timely payments and that the SSGC should ensure that there was adequate gas pressure.
The chairman of the board of directors, Nepra, went on to say that KE obtains a significant portion of its electricity from the national grid and questioned why you do not close your expensive power plants. According to the chairman of KE, Nepra, the company is receiving free electricity from the national grid because there is no power supply agreement between the federal government and the corporation. He went on to say that the federal government and KE should work together to overcome the issues surrounding the power supply agreement.