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HomeBusinessK-Electric To Refund Rs4.12/unit In September 2022 Bills

K-Electric To Refund Rs4.12/unit In September 2022 Bills

Customers of K-Electric who paid higher rates for electricity they used in July 2022 will receive refund of Rs4.117 per unit on their September bills as a result of the power regulator’s Friday decision, which maintained that while the users were overcharged, the cost of generating electricity was low during the month under review.

The National Electric Power Regulatory Authority (NEPRA) issued its decision and directed K-Electric to refund the overcharged amount to power consumers in their electricity bills for September 2022, as they had been charged at a higher rate in July 2022. According to NEPRA’s monthly fuel charges adjustment (FCA) algorithm, the choice was made. Following this judgement, the business will repay its customers Rs. 7.4 billion.

It should be mentioned that K-Electric had submitted a petition to NEPRA asking for a decrease of Rs3.476/unit due to a fuel adjustment. On August 31, the electricity regulator held a public hearing. The regulator has now increased the customers’ excess release by Rs0.641 per unit and decreased the rate by Rs4.117 per unit.

Except for lifeline power customers, home consumers consuming up to 300 units, agricultural consumers, and electric vehicle charging stations, this adjustment/relief will be provided to all KE user groups (EVCS).

“It is now emphasised that negative adjustment on account of monthly FCA is also applicable to the domestic users with Time of Use (ToU) metres, regardless of their consumption level,” the judgement stated.

It should be noted that on August 12, NEPRA permitted K-Electric to add Rs11.1023/unit as a monthly FCA for June 2022 to customers’ power bills for August and September 2022, with a potential revenue effect of Rs25 billion.

Additionally, on August 10, NEPRA had given K-Electric permission to charge an extra Rs. 0.5715 per unit for quarterly rate changes for the three months of June through August 2022, which will be levied in the following three months beginning in August and continuing through October 2022.

The FCA authority for May 2022 had also permitted K-Electric to bill users for an additional Rs9.518/unit over the course of two months, including Rs2.6322/unit in July and Rs6.886/unit in August 2022.

For the fiscal year 2022–2023, NEPRA increased the base electricity tariff by Rs7.9078/unit in June 2022. Later in July, the regulator had granted the federal government’s proposal to impose a standard pricing on the end-users of all Discos, including K-Electric, and to charge customers the higher base power tariff in FY2022-23.

The national basic power rate had also received notification from the federal government of an increase of Rs3.50 per unit (from Rs7.9078/unit).

The NEPRA ruling states that at the hearing, concerns were raised regarding the need for the sought fuel price variation in bills and whether K-Electric had complied with the merit order while dispatching its power plants and making power purchases from outside sources.

In its FCA request, K-Electric stated that the calculation for the month of July 2022 bills was based on the fuel cost component that CPPA-G had sought for the month of July 2022 and that it was subject to change depending on NEPRA’s decision of XWDISCO’s FCA for the month of July 2022.

The regulator observed that on January 26, 2010, NTDCL and K-Electric inked a power purchase agreement for five years that provided for the sale or purchase of 650MW at basket rates. Following this, the Council of Common Interest (CCI) reached a decision about the terms for the petitioner’s withdrawal of electric power from NTDCL at its meeting on November 8, 2012, where it was determined to decrease the supply of energy from NTDCL to K-Electric by 300MW.

However, K-Electric has challenged the CCI ruling in Karachi’s Sindh High Court through lawsuits and petitions. K-Electric and NTDCL have not yet signed a new deal, and K-Electric is still using the National Grid to get its electricity.

In its adjustment of bills requests, K-Electric attested that it dispatches energy from its own generation units (using the available fuel resources) and imports energy from outside sources in accordance with Economic Merit Order. Additionally, it confirmed that no late payment fee, markup, or interest was included in the cost of gasoline and power purchase claims.

The plant-wise generating data sheet, which was signed by K-Electric with the exception of BQPS III, was delivered. Additionally, copies of the invoices raised by IPPs and fuel suppliers were also given by K-Electric.

The power regulator ordered K-Electric to make sure that BQPS-III generating data sheets were submitted for both the preceding and next months together with its recurring monthly FCA requests.

K-Electric claimed that during July 2022, it was given an indigenous gas supply of 10 mmcfd out of the overall gas allotment. This was in response to the argument that BQPS-I units 5 and 6 should use indigenous gas rather than the more efficient BQPSII.

Only extra gas supply was redirected to BQPS-I due to the limitation of gas pressure at KPC, SGTPS, and KGTPS plants. This gas quota was completely utilised at BQPS-II in accordance with its availability and limitation of available gas pressure.

Additionally, from July 8 to July 12, which was Eid vacations, SSGC boosted its gas supply to K-Electric by up to 200 mmcfd. BQPS-II was completely utilised during these days in accordance with its capacity, and additional gas supply was redirected to remaining plants in accordance with EMO, subject to the availability of gas pressure.

K-Electric argued that it receives RLNG from two sources, namely SSGC and Pakistan LNG Limited, in response to the argument that BQPS-III should use all of the LNG that is available rather than simply the remainder, which should have been spent in BQPS-II (PLL). Other than BQPS-III, SSGC supplies gas to KE for power plants, and SSGC gas cannot be used at BQPS-III since PLL supply has been set up for it.

Technically, BQPS-III cannot use SSGC gas at 4-6 bar pressure since it needs high-pressure gas at 45 bar, according to a KE official. Regarding specifics of the disputed amount of Rs. 2,119 million claimed by PLL, K-Electric asserted that PLL had included an amount of Rs. 2,116 million on account of take or pay and Rs. 3 million on account of LPS in its invoice for the bills period from July 21, 2022, to July 31, 2022.

According to the agreement, PLL must use reasonable attempts to sell the gas to a third party in the event that K-Electric is unable to off-take the supply. PLL will then modify the cost paid to K-Electric on a net proceeds basis as collected from the substitute buyer. As a result, PLL was already allowed to sell the specified quantity to SNGPL at the appropriate OGRA-notified RLNG price, and the amount on account of take or pay is presently under dispute.

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