KE’s Consumers to Enjoy Cut in Electricity Rates
Staff Report:
The consumers of K-Electric (KE) are set to enjoy a reduction in electricity rates up to Rs 0.27 per unit on account of fuel adjustment for month of October 2024.
The consumers had a relief of Rs 0.17 per unit reduction in electricity rates on account of fuel adjustment for month of September 2024.
The National Electric Power Regulatory Authority (NEPRA) conducted a public hearing on KE’s Fuel Charge Adjustments (FCA) for the Month of October 2024.KE Files Provisional Fuel Charge Adjustment of PKR 0.51/KWh for August
Member NEPRA shared data from the past 3 years which showed that KE customers had in fact paid a lower FCA than counterparts in other parts of the country.
KE had submitted its request for a PKR 0.27 per unit relief to be passed on to customers in their bills on account of FCA for October 2024. During the hearing, commentators shared a grievance that Karachi was bearing the brunt of “expensive” generation through higher bills, which prompted Member NEPRA to fetch data and share it on the public forum. During 2022, KE FCA was PKR 3.62 rupees while XWDISCOs was PKR 4.41; in 2023, KE FCA was negative PKR 2 rupees while XWDISCOs charged positive PKR 0.90; in 2024, XWDISCOs charged PKR 2.92 per unit while KE adjustments stood at PKR 1.37.
The members acknowledged that thus far in FY25, XWDISCOs had achieved lower FCA than KE, but it was still incorrect to assert that Karachi’s residents are unjustly burdened with the most expensive electricity in Pakistan. At the same time, NEPRA and commentators did question KE officials on whether the utility had utilized its generation efficiently and in compliance with the economic merit order, to ascertain the accuracy of the proposed FCA.
KE officials clarified that power generation had been optimized to prioritize highest efficiency and cheapest cost. To meet the power demand, KE had utilized its BQPS-2 and BQPS-3 plants on RLNG, while significantly cutting back generation on Furnace Oil. There was also no significant change in the quantum of power drawn from the National Grid in comparison to reference month. The primary driver of this FCA relief, it was explained, was from the decline in international fuel prices and higher generation efficiency. As for Economic Merit Order, KE was duly submitting compliance reports to NEPRA for verification.
Hearing also included discussion on KE’s Multi-Year Tariff which had lapsed in 2023 and was currently under deliberation at the regulator’s end. Because the MYT is under deliberation, KE’s requests of FCA were being made on provisional basis using older reference prices. MYT approval would help bring KE’s process more in line with XWDISCOs by providing accurate reference pricing and mechanisms.
Last week, the authority issued its decision of negative 1.14 rupees per unit for XWDISCOs for the month of October 2024, which will be applicable on customer bills for the month of December 2024. Customers who are not eligible will be lifeline consumers, domestic consumers using upto 300 units, Electric Vehicle Charging Stations (EVCS), agri customers and prepaid electricity customers.
NEPRA has reserved decision on KE’s petition and is expected to issue a decision after completing due process.
