KARACHI: The Karachi Electric (KE) has submitted a multiyear tariff petition with the National Electric Power Regulatory Authority (NEPRA) requesting to extend the applicability period of existing tariff until June 30, 2026 along with some modifications and adjustments.
The KE has sought an increase of Rs 0.66/kWh in operation and maintenance (O&M) component of the existing tariff. The KE has also sought to change in clawback formula thresholds from 12%, 15% and 18% to 15%, 18% and 20%.
“In the existing tariff adjustments, the level of ‘X’ factor in the O&M cost adjustment formula should be lower of the current levels or 30% of increase in Consumer Price Index (CPI),” the power utility company requested.
Furthermore, the power utility has requested in its application to NEPRA that in existing tariff, a working capital component be included to cover late payments by government entities and government of Pakistan in respect of tariff differential subsidy (TDS) claims due to circular debt.
“Customers are much better placed if the utility continues to operate in an integrated manner. It will (a) attract the appropriate level of investment across the value chain and hence result in an improved quality of service; and (b) result in lower tariffs for the customers,” said the KE.
The KE seeks a continuation of the structure of the I-MYT for a control period of 10 years as “it meets the objectives of the business plan”.
It has also requested to include a force majeure clause for the allowance of irrecoverable costs or lost revenue from business disruption in case of a force majeure event.
In this regard, the NEPRA has notified to all stakeholders stating that any interested person who desires to participate in the proceedings may file an intervention by July 10.
Reasoning the submission of a multiyear tariff petition, the K-Electric said, “The structure of the current I -MYT tariff has worked well as the I-MYT is a performance-based price control. It allows uncontrollable costs to be passed through into tariffs, while controllable costs are subject to CPI-X price regulation.”
The tariff structure provides incentives for KE to make investments in new capacity and to improve the operational efficiency of its existing generation, transmission and distribution assets without having any guaranteed returns.
The company said that the customers would benefit from these investments, in terms of increased supply, network resilience, and lower customer tariffs in real terms.
“Increased electricity supply and network resilience also has a positive impact on economic activities, resulting in improved gross domestic product (GDP) and employment in Pakistan,” it added.