KE seeks massive Rs10.69 per unit tariff hike for multi-year period

• KE wants base tariff to be increased from Rs34 to Rs44.63 per unit.
• Utility supplier aims to establish multi-year tariff from 2023 to 2030.
• Company cites various cost components for increase in price.
  

KARACHI: K-Electric (KE) has sought a massive Rs10.69 per unit hike in the base tariff from the National Electric Power Regulatory Authority (Nepra), The News reported on Saturday.

Citing a multi-year tariff spanning seven years, KE aims to establish a multi-year tariff from 2023 to 2030 and has requested the power regulator to validate the cost of power EPP (energy purchase price) components at Rs18.88 per kWh — subjected to monthly and quarterly adjustments based on power costs.

If approved, the utility company's base tariff will be increased to Rs44.69 from the previous Rs34 per unit.

KE's tariff hike plea comes as the company is facing scrutiny by the Nepra over escalating power tariffs and persistent loadshedding with consumers, stakeholders and the regulatory body expressing grave concerns over the utility’s fuel choices, costlier generation, operational inefficiencies and safety risks.

The electricity supplier's request, which falls under the KE's Multi-Year Tariff for the period from FY2023-24 to FY2029-30, for an increase in tariff includes various cost components such as the cost of power CPP (capacity purchase price) component which amounts to Rs12.54 per kWh which will be revised quarterly.

Meanwhile, the Transmission Charge is set at Rs3.48 per kWh, while the Distribution Charge is calculated at Rs3.84 per kWh. The Operation and Maintenance (O&M) charges are sought at Rs0.42 per kWh, indexed annually to the Pakistan Consumer Price Index (CPI), and the Retail Margin is estimated at Rs0.59 per kWh, adjusted yearly based on revenue recovery.

Furthermore, the Recovery Loss Allowance, including a cap and floor mechanism for under/over recovery, is calculated at Rs2.88 per kWh. The Working Capital is set at Rs2.07 per kWh, annually adjusted for over/under recovery scenarios.

However, it is to be noted that the actual price charged to the customers on monthly bills remains under the government’s control through a uniform tariff policy, ensuring consistency across customer categories.

Nepra, in response to the KE's request, has invited all interested or affected parties to provide comments within seven days from the notice, as part of the regulatory process to ensure transparency and stakeholder engagement before final decisions on tariff adjustments are made.

KE clarification

Expressing its point of view on the tariff hike, KE has clarified that its request for supply tariff adjustment would not impact the customer bills.

The electricity supplier has stressed that the price of electricity charged to customers in their monthly bills remains governed by the government’s uniform tariff policy, ensuring consistent charges across customer categories nationwide.

The utility company, noting that its Multi-Year Tariff petition is currently under deliberation by the Nepra, maintains that as a vertically integrated utility responsible for managing the generation, transmission, and distribution of electricity, these costs constitute almost 90% of its request for price increase.