KE electricity rates likely to come down by Rs 4.21 per unit

Islamabad: The KE electricity rates are likely to come down by Rs 4.211 per unit on account of the Fuel Charges Adjustment (FCA) for August.

In a petition submitted to NEPRA, K-Electric has requested the regulator to allow the company to reduce the power tariff by tariff by Rs 4.211/unit on account of the monthly FCA for August.

NEPRA will conduct a public hearing on 29 September over the petition submitted by K-Electric on account of Fuel Charges Adjustments (FCA) for August 2022. The negative FCA at the rate of PKR 4.211/unit requested by KE will provide a relief of Rs 7.217bn to Karachiites. 

Justification of cut in KE electricity rates

For the hearing following issues have been framed by the regulator for discussion Including, whether the requested Fuel Price variation is justified. Whether K-Electric has followed the merit order while giving dispatch to its plants as well as power purchases from external sources?

August’s FCA is lower compared to the previous month primarily due to a decrease in fuel prices. The price of power purchased from CPPA-G in August 2022 has decreased by 33% as compared with June 2022.

Similarly, for RLNG, the price in August 2022 decreased by 16% from June 2022.

KE had used expensive fuel of Furnace Oil for power generation during August. The price of Furnace Oil increased by 3% during August as compared to June 2022.

As per KE’s spokesperson, fuel adjustment is reviewed every month and is applicable on consumer bills for only one particular month per applicable tariff across the country.

FCA is incurred by utilities due to global variations in fuel prices used to generate electricity and change in the generation mix.

Furthermore, Consumers also get benefits when fuel prices decline as compared to the reference month. FCAs are applied after NEPRA’s scrutiny & public hearings, which are conducted independently for KE and state-owned entities (XWDISCOs).

Alongside final approval on the FCA to be charged to consumers, the NEPRA Authority also specifies the period during which these FCA can be applied to consumer bills.