Govt drops electricity bomb on Karachiites

• Additional collections to be made in October and November 2023.
• Decision was made in first quarter adjustment of last financial year.
• Nepra approved inclusion of actual or prudent expenses on KE's request.

ISLAMABAD: Karachi residents will have to pay increased electricity bills as the National Electric Power Regulatory Authority (Nepra) has decided to hike the power tariff by Rs4.45 per unit for K-Electric (KE) consumers, it emerged on Friday.

The decision to increase the rates of electricity, according to a  Power Division notification, was made in the first quarterly adjustment of the last financial year.

Meanwhile, additional collections from the consumers of KE will be applied to the October and November 2023 bills, the notification read.

Meanwhile, in response to a request by KE, Nepra has approved the inclusion of actual or prudent expenses related to the temporary operation of Unit-3 of Bin Qasim Power Station (BQPS-I) from May 1 to August 15, 2021, in cost calculations.

Consequently, previous decisions made by the Authority on September 15, 2021, and May 12, 2022, regarding this issue, have been modified to accommodate this adjustment.

"In view of the foregoing, the Authority hereby decides to accede to the request of KEL [K-Electric Limited] and allows the actual/prudent cost relating to the interim operation of Unit-3 of BQPS-I (from May 01, 2021, to August 15, 2021). Accordingly, the earlier decisions of the Authority (dated September 15, 2021 and May 12, 2022) in this regard, stand modified to this extent," the power regulator stated in its order issued on Friday.

However, a member of the authority, Mathar Niaz Rana, in an additional note, said that under the Multi-Year Tariff (MYT) plan, KE was supposed to have both phases of BQPS-III up and running by December 2019 but the company couldn’t meet this deadline, and as a result, they had to use Unit 3 of BQPS-I, which led to extra fuel expenses. This extra cost due to inefficiency should not be transferred to the consumers.

Nepra held a public hearing on January 25, 2023, wherein an opportunity was provided to KE to present its case. 

In the public hearing, the utility stated that they chose to temporarily use Unit-3 of BQPS-1 to meet Karachi’s peak summer demand, rather than resorting to more expensive power generation methods or implementing power outages, in the best interest of consumers as per Nepra Act Sections 31(2) & 32(3).

After detailed deliberation, the authority has observed that at the time of the original determination on the LPM dated September 15, 2021, and subsequent decision dated May 12, 2022, on the review petition filed by KE, it was of the view that delays in the commissioning of BQPS-III and the subsequent interim utilisation of the inefficient Unit-3 of BQPS-1 are due to the poor performance of KE and the consumers should not be charged for the inefficiencies of KE. 

Accordingly, the authority considered it appropriate to restrict the FFC of the interim operation of Unit-3 of BQPS-1 at the level of BQPS-III.

Nepra noticed that KE had already operated Unit-3 of BQPS-1 when the decision on the Licensee Proposed Modification (LPM) was issued in September 2021. They also imposed a fine of Rs200 million on KE for previous issues. Therefore, to avoid double penalties, KE should not face additional charges.

Considering the Appellate Tribunal’s judgment and KE’s submissions, the Authority believes that, as per Section-31(3)(a) of the Nepra Act, a licensee should recover reasonable costs to meet their needs. If the Authority allowed the interim operation of Unit-3 of BQPS-I in the public interest, the operation costs should be considered reasonable and permitted.