Tariff and tax adjustments on electricity July bills of KE Consumers
KARACHI: Karachi Electric Supply Company ((KE) has announced a new tariff regime and tax adjustments in new bills for July 2022 following the government policy.
In accordance with the governing laws, rules, and regulations of the government of Pakistan and NEPRA, KE has made various adjustments to the electricity rates and tariff structure.
This will go into effect in July and be applicable nationwide, including to consumers in KE’s service territory.
The National Electric Power Regulatory Authority (NEPRA) and the Government of Pakistan are responsible for determining the number of electricity costs to be recouped from Pakistani consumers through their electricity bills.
These modifications include the non-extension of exemptions for zero-rated industries and exemptions for industrial consumers’ peak-hour electricity consumption.
The retailer tax with revised brackets has been implemented for business consumers. The applicable tariff and calculation methodology for non-time-of-use residential consumers will also be revised.
Consumers with and without Legal Protection in new bills of July 2022
In accordance with SRO 1004 dated 7th July 2022, the tariff rates and slab structure for a tariff of unprotected non-ToU residential consumers (i.e. consumers with a sanctioned load below 5kW) have changed.
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“Protected” consumers, as defined by tariff terms proposed by the GOP as part of its Power Subsidy Rationalization Plan and by NEPRA, are non-ToU residential consumers who have consistently consumed less than 200 units of electricity per month over the previous six months.
The Unprotected category includes all other non-ToU residential consumers.
Previously, unprotected consumers received the benefit of a billing slab in two slabs which the government has eliminated now.
In the future, consumers in the unprotected category will pay based on a single unit-based tier.
As a result, the government has also reduced tariff rates to lessen the impact on consumers.
Commercial Customers’ Bills
The government of Pakistan previously allowed industrial consumers to use electricity during peak hours at off-peak rates.
The government had granted this relief until June 2022, and as a result, it granted no further extension. Industrial consumers will now be subject to peak rates.
Similarly, the government has eliminated the 9 cents/unit fixed rate for zero-rated (or export-oriented) industries, which was in effect until June 2022. Now, KE will charge these industries normal industrial tariff rates.
In addition to the above charges, it is important to note that KE will charge FCA routine charges to July bills 2022 within KE’s service area.
Tax on Retail Sales to Business Customers in July Bills 2022
According to the Government of Pakistan Finance Act 2022 applicable throughout the country, the government has revised the tax on unregistered retailers as of July 1, 2022.
For bills between PKR 0 and PKR 30,000, Ke will charge consumers on commercial tariffs a minimum fixed tax of PKR 3000. Those with monthly bills between PKR 30,001 and PKR 50,000, will pay tax at Rs 5,000, whereas those with monthly bills exceeding PKR 50,000 will be paying tax at Rs10,000.
Notable is the fact that inactive income taxpayers will pay double the taxable amounts.
In addition, these taxes apply even if the consumer’s property is vacant.
Fuel Charges Adjustments (FCA) in August Bills 2022
Unprecedented increases in the cost of furnace oil and RLNG resulted in higher production costs for utilities and higher electricity rates for consumers.
In accordance with the tariff mechanism by NEPRA, utility companies recover incremental fuel costs from consumers via Fuel Charges Adjustments (FCA) on their monthly bills, subject to the regulator’s review and approval.
Within the FCA decision, the regulator also specifies the billing month for the FCA. For instance, utilities billed March 2022 FCA in June 2022.
Consequently, in its determination for the month of April 2022, NEPRA has authorised KE to charge PKR 5.2718 per unit for units consumed in April 2022 to bill in July 2022.
In addition, NEPRA has permitted the recovery of the FCA for May ’22 in two instalments, with PKR 2.6322 per unit in July and the remaining PKR 6.8860 per unit to charge in August 2022 bills.
Customers will see two FCA entries on their July bills, corresponding to April and May, respectively.
Regarding the revisions, KE’s spokesperson stated, “We recognise that our customers may have a number of questions. We have updated our website with frequently asked questions to assist them during this time. To reiterate, KE has enabled these modifications in accordance with the laws of the Pakistani government and the rules of the regulatory agency NEPRA, and they are applicable throughout the nation.
