ISLAMABAD - The National Electric Power Regulatory Authority (Nepra) on Friday allowed the K-Electric to collect an additional up to Rs4.45 per unit, on account of quarterly tariff adjustments (QTAs), from the consumers during the first four months of the ongoing calendar year (January to April 2023). However, the average increase will be Rs3.2116 per unit, and it would be recovered from the consumers in their utility bills for Jan-April 2023 based on the electricity units consumed during the months of October, November, and December 2022. NEPRA has issued the decision on the federal government motion submitted to NEPRA with respect to recommendation of consumer-end tariff for K-Electric. As per practice, the government maintains a uniform tariff across the country and generally the differential is adjusted through subsidy. The Ministry of Energy has therefore requested for application of quarterly adjustment on K-Electric consumers as applicable for XWDISCOs. The federal government has filed motion to NEPRA under section 7 & 31 of the NEPRA Act, 1997 read with rule 17 of NEPRA Tariff (Standards and Procedure) Rules, 1998, for application of quarterly adjustment on K-Electric consumers as applicable for XWDISCOs. During hearing, NEPRA was told that the federal government is providing a subsidy of Rs18/ unit to Karachiites on electricity and now the government wants to reduce the subsidy. As per the decision residential power consumers who consume up to 300 units of electricity a month (excluding lifeline consumers) will be charged an additional Rs1.4874/ unit, and consumers of over 300 units will be charged Rs3.2116/ unit. Likewise, the general supply tariff for commercial consumers of sanctioned loads of less than 5kW will be additionally charged Rs2.6847/unit and for 5kW and above, it will be Rs4.4547/unit. For the time of use (ToU) consumers, electric vehicle charging stations (EVCS), general services, the industrial sector, single point supply, Agriculture tube wells, street lights, and residential colonies attached to industrial premises will all be charged with an additional Rs4.4547/units in these four months. It is to be noted that on October 14, 2022, the Authority determined the periodic adjustment in tariff for the fourth quarter of FY2021-22 for XWDlSCOs and allowed the positive quarterly adjustment of Rs93.96 billion to be recovered from all categories of consumers except lifeline consumers, in a period of four months with effect from 01.10.2022. In accordance with the National Electricity Policy, 2021, the government may maintain a uniform consumer-end tariff for the KElectric and state-owned distribution companies -- even after privatisation -- through the incorporation of direct or indirect subsidies. The federal government has requested NEPRA to increase the power tariff by Rs3.21 per unit for K-Electric consumers on account of quarterly adjustments. The power regulator on December 27, 2022 held a public hearing on the federal government’s motion with respect to the consumer-end tariff recommendations of the K-Electric to adjust the tariff of K-Electric under the head of the Uniform Tariff Policy. The K-Electric said, “For bills already issued in January 2023, the adjustments will be billed in the following month.” An intervener Balwani did not support the motion by submitting that K-Electric is not a Disco in strict sense as it is engaged in all 3 activities of power i.e. generation, transmission & distribution and was never part of erstwhile WAPDA. It has its own tariff setting mode since 2002 governed by NEPRA. Tariff setting of the rest of the Discos is governed by NEPRA only to the extent of distribution. If the GOP/federal government intends to pass on all the quarterly & any other adjustments of NTDC/CPPA-G on KE consumers then in all fairness it should first take over the generation segment of KE with all its assets & liabilities and any residue be adjusted against the 24% share capital which it owns in K-Electric. He further said that the motion of the federal government (FG) to pass on the burden of Rs.93,957 million also includes CPP of Rs.55,258 million & UOSC of Rs.14,167 million. These charges have been occurred due to underutilization & non-utilization of the installed capacity for which the consumers are being penalized for no fault. It is the GoP/ FG which allowed setting up of so many generation plants without any policy or farsightedness about the future demand scenario. Even to-day, in the winter months, when demand is at its lowest, full demand is not being met & load shedding is prevalent in KEs jurisdiction as well as in other DISCOs. The aforementioned amount also includes Rs.35,704 million on account of T&D losses, whereas T&D losses of K-Electric are already incorporated in its JVIYT and are at present at 15.36% which are already very high. Further, burdening of KE consumers with additional T&D losses, amounts to double whammy which is totally unjustifiable. Bilwani also requested to rework the amount of quarterly adjustment by including therein the projected sales of 4 months of K-Electric, which will slightly reduce the overall burden on all the consumers of the 11 Discos. FPPCI also submitted written comments vide letter dated 26.12.2022. A summary of the concerns raised by FPCCI is as under; the motion is not supported as status of K-Electric, is not a DISCOs. Due consideration of unbundling of K-Electric is necessary before any change in its operating character including privatization. Tariff for KE was set in terms of circumstances surrounding all of its activities, whereas DISCOs activities are limited to distribution. Zubair Motiwala submitted during the hearing that cost of doing business/cost of manufacturing has increased, resulting in decrease in exports by 9%, which are expected to further go down by 25-30% in December. K-Electric is not a DISCO by any means, therefore, it would not be justified to pass on the proposed quarterly adjustment on K-Electric consumers. Tanvir Ban, representing KCCI, also did not support the motion. Hammad Hashmi, DG MIRAD TESCO, opposed the idea of including expensive generation of K-Electric in the total generation basket of the system, as this would increase the generation cost of XWDISCOs. On the concerns raised by the commentators, the MoE explained during the hearing that subsidy of K-Electric is around Rs.293 billion. The purpose of levying category wise rates as proposed in the motion is to reduce the subsidy of the federal government towards K-Electric and to make the tariff uniform across the country. The Authority noted that the instant motion has been filed by the federal government to make the tariff uniform across the country, keeping in view the National Electricity Policy 2021. The Authority further observed that despite the proposed increase in tariff for all categories of the consumers except life line, the federal government would be picking up substantial amount of subsidy, as explained by the Ministry of Energy during the hearing. In view thereof, the Authority has decided to accept the motion filed by the federal government. The Authority has also accepted the request of the federal govt to issue a separate SoT for the allowed increase in tariff for all categories of consumers except life line.
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