KE Tariff Cut: Nepra Revision Slashes Rate by Rs7.6/Unit
Summary of Nepra Notification regarding KE (K-Electric) – FY 2023-24 & Beyond
This document details a notification issued by Nepra (National Electric Power Regulatory Authority) regarding revisions and reaffirmations of decisions concerning K-Electric’s (KE) power purchase price and tariff structure. Here’s a breakdown of the key points:
1. Fuel Cost revision & Re-determination:
* nepra has decided to revise the fuel cost reference for FY 2023-24.
* This means all previously persistent monthly fuel cost adjustments for FY 2023-24 will need to be recalculated, and any additional cost will be passed on to KE consumers.
* Nepra will now “actualise” costs (variable operation & maintenance, capacity charges, and transmission charges) based on actual figures for FY 2023-24.
* KE is directed to file revised fuel cost adjustment claims for FY 2023-24.
* Power purchase price references for FY 2024-25 and 2025-26 will be determined after KE submits revised annual adjustment requests.
2. Revenue-Cap vs. Price-Cap Tariff:
* Concerns were raised about switching from a traditional price-cap tariff to a revenue-cap approach for KE.
* Nepra reaffirmed its decision to maintain the revenue-cap approach, arguing there was no rationale to change it. this approach allows for actualized units sent out without performance benchmarks.
3. Operation & Maintenance (O&M) Costs:
* KE argued that using lower reference O&M costs would disincentivize efficiency and make operations unviable. They also objected to a 50/50 cost-sharing mechanism if actual O&M costs were lower than allowed.
* Other parties argued that the O&M cost should be based on FY 2022-23 (the last year of the previous Multi-Year Tariff – MYT) and that KE’s FY 2023-24 O&M costs were based on unaudited financials.
* Nepra reaffirmed its earlier decision on the O&M cost methodology, rejecting KE’s and other parties’ arguments.
4. Late Payment Surcharge (LPS):
* KE requested to retain the entire amount of the late payment surcharge.
* Nepra allowed KE to retain the LPS, but only to the extent of any supplemental charges incurred due to delayed payments, excluding charges from CPPA-G (due to a Master Collection Account arrangement). Nepra noted the methodology is consistent with that used for other Discos.
* Nepra reaffirmed its earlier decision on this matter.
5. Other Decisions:
* nepra rejected requests to shorten the seven-year tariff control period.
* Nepra reaffirmed its earlier decision regarding the sharing mechanism for other income.
* Nepra noted “serious concerns” were raised regarding upfront recovery loss allowed.
In essence, the notification demonstrates Nepra largely upholding its previous decisions despite objections from KE and other stakeholders. It focuses on finalizing costs for FY 2023-24 and setting the stage for future tariff adjustments based on revised requests from KE.
The article is available on Dawn.com.