K-Electric seeks approval for Rs3.09 per unit FCA to recover over Rs6.2 billion

KARACHI: K-Electric has requested provisional approval from the National Electric Power Regulatory Authority (Nepra) to implement a Fuel Charges Adjustment (FCA) of Rs3.09 per unit for July 2024.

This adjustment is intended to recover an additional Rs6.206 billion, primarily due to a 47.5 per cent increase in fuel costs driven by a 73 per cent surge in generation costs.

Nepra has scheduled a public hearing for August 29, 2024, to scrutinize the data provided by K-Electric regarding the fuel price variations for July 2024, which form the basis for the proposed FCA of Rs3.09 per unit.

K-Electric’s calculation of the FCA for July 2024 is based on the Central Power Purchasing Agency’s (CPPA) fuel cost for the month, as per the CPPA-G’s requested rate, and is subject to Nepra’s final decision. The FCA has been calculated using March 2023 as the interim tariff reference point.

K-Electric claims that it dispatches electricity in accordance with the Economic Merit Order (EMO), utilizing its own generating units and sourcing additional power from external suppliers. The company assures that the fuel and power purchase costs do not include any late payment surcharges, mark-up, or interest.

The data submitted to Nepra reveals that K-Electric’s reference cost was based on a projected sent-out volume of 1,478 GWh at Rs15.99 per unit. This projection included Rs13.504 billion for its own fuel costs and Rs10.135 billion for external power purchases, totaling Rs23.638 billion.

However, the actual data for July 2024 showed significant discrepancies, resulting in a substantial financial impact on consumers. The actual cost per unit sent out was Rs19.08, with a total fuel cost of Rs14.730 billion exceeding the projected costs due to K-Electric’s own fuel expenses.

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