Daily Times

KARACHI: National Electric Power Regulatory Authority (Nepra) on Thursday has notified revised multi-year tariff (MYT) for K-Electric (KE) at a base rate of Rs12.81 /KwH, slightly up from the previously approved tariff of Rs12. 771/KWh.

The period for the MYT shall be of seven years applicable from July 01, 2016 till June 30, 2023. KEL had originally sought MYT at Rs16.1/KwH for a period of ten years.

Responding to the decision, internal sources said the tariff notified for a seven-year period starting July 1, 2016 might have an impact on future investment plans as well as company’s proposed takeover by Shanghai Electric of China.

It is pertinent to mention here that the reduction in MYT announced by Nepra would not impact consumer-end tariff as it only impacted the KE’s profitability.

In its order, Nepra directs KE to obtain approval of the Nepra for future power acquisition along-with the rates and other terms and conditions for purchase of power from external sources. KE shall not be allowed any adjustment in tariff on account of power purchase cost variation in respect of those power sources for which prior approval of the Nepra has not been obtained.

KEL has also been directed to stop charging bill collection fee separately from the consumers in future; pay interest on security deposits to the consumers through their bills in future and stop charging meter rent from those consumers who pay their cost of meter.

Also, KE is allowed a total investment of Rs 298,915 million for the seven years tariff control period for its Generation, Transmission and Distribution Systems.

The power regulator said KE shall not carry out any adjustment in the consumer end tariff unless allowed, approved or directed by the authority.

The first MYT to KE was awarded by Nepra in 2002, for a period of seven years. After KE’s privatization in 2009, the tariff control period of 7 years was revised. Under the referred tariff control period (2009-2016) KE turned into a profit making entity while the performance regulatory benchmarks were not achieved, said Nepra.

Following the expiry of previous MYT, KE had filed its integrated MYT petition, requesting determination of MYT for a period of ten (10) years commencing from July 01, 2016 to June 30, 2026.

The said petition was decided by the Nepra with a MYT awarded to KE for a tariff control period of seven (7) years K-Electric was allowed an overall tariff of Rs 12.07 per kWh w.e.f. July 01, 2016 for the 7 years control period. K-Electric, being aggrieved with the determination, filed a motion for leave for review, MLR was decided by the Nepra in October, 2017 wherein, KE’s tariff was enhanced by around Rs 0.70 per kWh from Rs 12.0692 per kWh to Rs 12.7706 per kWh on account of revised investment plan, load shedding assumptions, T&D losses, heat rates, cost of debt and load growth.

KE then requested the Ministry of Energy to file reconsideration request with Nepra to reconsider anew the determined MYT, the federal government acting on KE’s letter, filed the reconsideration request with Nepra without specifically commenting on any of the issues raised by KE in its letter.

Published in Daily Times, July 6^th 2018.