The National Electric Power Regulatory Authority (Nepra) on Tuesday approved Rs4.70 per unit reduction in fuel cost adjustment (FCA) for electricity used by K-Electric consumers in September.
After the approval is publicly announced in a few days, the KE will be required to refund customers around Rs7.78 billion through an adjustment to their November bills.
The decision was made during a public hearing presided over by members Rafique A. Shaikh and Maqsood Anwar Khan as well as Nepra Chairman Tauseef H. Farooqui. According to the regulator, a reduction in FCA of Rs4.70 per unit had been figured out for September, but a notification wouldn’t be released until the data verification process based on evidence and invoices was complete.
The KE had sought Rs4.62 per unit reduction in FCA to refund Rs7.74bn overcharged to consumers in September. However, after examination of data, the regulator worked out a reduction of Rs4.70 per unit, with a revenue impact of Rs7.78bn.
This is the third consecutive month, FCA for customers of KE was lower than the reference tariff. Due to the record-breaking increase in FCA prices over the past several months, which exceeded Rs11 per unit, some of the load was reduced. Last month, KE’s FCA decreased by Rs4.89 per unit compared to the reference fuel cost, which had a $8.4 billion revenue impact.
The increase in the national uniform base rate, which increased by Rs7 per unit in August, is mostly to fault for the decrease in FCA. According to KE, the cost of fuel was primarily lower in September compared to June as a result of decreasing fuel prices. According to the KE, the cost of power from the Central Power Purchasing Agency (CPPA) in September was 36% less expensive than in June.
Similar to RLNG, the price was 13pc in September than it was in June when the reference fuel rates were established. The cost of furnace oil increased by 2% from June to September.
The reduction in FCA, on notification, would apply to all the consumer categories except lifeline consumers, domestic consumers consuming up to 300 units, agriculture consumers and EVCS (Electric Vehicle Charging Station) consumers.
Consumers would feel the effects of the monthly FCA modification through November utility bills from the private power company based in Karachi.
The federal government builds quarterly tariff adjustments into the base tariff as a result of variations in the power purchase price, capacity charges, variable operation and maintenance costs, use of system charges, and the impact of transmission and distribution losses. Under the tariff mechanism, changes in fuel costs are passed on to consumers only on a monthly basis through an automatic mechanism.