Karachi citizens are bracing for an upswing in their electricity charges as the National Electric Power Regulatory Authority (Nepra) announced a hike of Rs4.45 per unit for K-Electric (KE) consumers on Friday.
The decision stems from the Power Division’s first quarterly adjustment of the prior fiscal year. Consequently, the added collections will be reflected in the October and November 2023 electricity bills.
Nepra’s Revisions and Adjustments
Reacting to a proposal by KE, Nepra gave the nod to incorporate the actual or reasonable expenditures tied to the temporary operation of Unit-3 of Bin Qasim Power Station (BQPS-I) between May 1 and August 15, 2021, into cost considerations.
The order from the power regulator elucidated, “The Authority decides to accede to KEL’s [K-Electric Limited] request, allowing the actual/prudent cost concerning the interim operation of Unit-3 of BQPS-I. Therefore, previous decisions by the Authority on September 15, 2021, and May 12, 2022, are modified accordingly.”
However, an authority member, Mathar Niaz Rana, highlighted that K-Electric failed to activate both phases of BQPS-III by December 2019 as stipulated under the Multi-Year Tariff (MYT) plan. The fallback plan, operating Unit 3 of BQPS-I, led to augmented fuel costs, which Rana argues shouldn’t burden consumers.
Nepra’s Public Hearing and Final Decision
A public hearing held by Nepra on January 25, 2023, offered KE an avenue to justify its actions. During the session, KE defended its choice to temporarily run Unit-3 of BQPS-1 during Karachi’s high summer demand. They argued this was a preferable solution over costlier power generation methods or causing power interruptions, aligning with Nepra Act Sections 31(2) & 32(3).
Post extensive discussions, Nepra identified KE’s inefficiencies, particularly the lags in launching BQPS-III and the interim reliance on the less efficient Unit-3 of BQPS-1. The Authority initially felt consumers shouldn’t bear the brunt of these inefficiencies. Therefore, Nepra initially restricted the FFC of Unit-3’s interim operation to BQPS-III levels.
However, revisiting KE’s operation of Unit-3 of BQPS-1 in September 2021 and factoring in a previous fine of Rs 200 million, Nepra believed imposing additional charges on KE would be redundant.
In conclusion, considering the judgment of the Appellate Tribunal and KE’s representations, Nepra decreed that licensees should recover logical costs under Section 31 (3)(a) of the Nepra Act. If Nepra sanctioned Unit-3 of BQPS-I’s interim operation in the public’s interest, the operational costs are deemed reasonable.
