K-Electric (KE) has made a significant request to the National Electric Power Regulatory Authority (Nepra) regarding the pass-through of a negative fuel cost adjustment (FCA) benefit to consumers. This move comes as part of an effort to uphold fairness and transparency in the energy sector.
In its petition, KE highlighted that it had overcharged consumers in April and, therefore, urged Nepra not to transfer the full impact of the Rs4.69 per unit FCA benefit to consumers. Instead, KE proposed retaining around Rs800 million in its accounts, aligning with previous instances where regulators allowed similar savings on fuel costs.
According to KE’s report, the actual fuel cost turned out to be Rs4.69 per unit lower than what was charged to consumers in April. This resulted in a substantial fiscal impact of Rs7.2 billion. The company emphasized that it had already submitted necessary data for tariff determination post-June 2023, indicating pending adjustments totaling Rs16 billion for the period spanning July 2023 to April 2025.
Furthermore, KE pointed out additional pending adjustments related to heat rate variations at its power plants in Korangi and Port Qasim amounting to Rs600 million and Rs200 million respectively under the previous multi-year tariff scheme.
As discussions unfold between KE and Nepra concerning these financial matters, a public hearing has been scheduled for June 19th. This hearing will delve into whether the requested FCA adjustment is justified and assess if KE adhered to operational guidelines such as following merit orders when dispatching power from its plants or procuring electricity from external sources like the national grid.
While Nepra had already greenlit Rs15.2 billion out of the total requested adjustment sum of Rs16 billion through prior determinations, questions remain regarding some specific aspects raised by KE pertaining to accumulated actualization of fuel costs based on various operational factors since July 2023.
The monthly review process of FCA remains crucial within the established tariff framework nationwide, ensuring accountability and oversight in cost pass-through mechanisms across energy providers.
Experts underscored that such regulatory engagements between utilities like KE and governing bodies are vital for maintaining market equilibrium while safeguarding consumer interests. Transparency and due diligence in handling cost adjustments can foster trust among stakeholders and promote stability within the energy ecosystem.
As stakeholders await further developments following Nepra’s upcoming public hearing, industry observers emphasize vigilance on both sides towards achieving a balanced resolution that upholds fairness for all parties involved – from utility companies seeking operational viability to end consumers expecting reasonable pricing structures.
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