The National Electric Power Regulatory Authority (NEPRA) has approved a tariff hike of Rs 3 per unit for K-Electric (KE) under the Fuel Charges Adjustment (FCA) mechanism, aimed at recouping an additional Rs 6.105 billion for July 2024. This increase will be reflected in customer bills in December 2024.
In its FCA petition for September 2024, KE requested NEPRA to address pending decisions from July and August 2024. During a public hearing on August 29, 2024, KE explained that its electricity costs are higher than those of the Central Power Purchasing Agency-Guaranteed (CPPA-G) due to the absence of nuclear and hydro power plants in its portfolio and limited access to indigenous gas for its own generation. These factors contribute to KE’s elevated generation costs compared to the CPPA-G basket.
To mitigate these costs, KE is pursuing a strategy to rationalize its energy expenses. The company has issued Requests for Proposals (RFPs) for 640 MW of renewable energy, with the bidding process for 150 MW of solar projects at Winder Bela already concluded. The Bid Evaluation Report has been submitted to NEPRA, while the bidding for the remaining projects is still underway.
Additionally, KE is working on enhancing its interconnection capacity with the national grid. The KKI and Dhabeji interconnections are expected to be energized soon, with Dhabeji already energized recently. KE is also looking to source power from the Jamshoro Coal Power Project following its conversion to local coal.
NEPRA noted that power supply from Independent Power Producers (IPPs) connected to the National Transmission and Dispatch Company (NTDC) network may face challenges due to technical and legal issues surrounding interconnections and Power Purchase Agreements (PPAs). This was highlighted in response to commentary from Arif Bilwani regarding the inefficient operation of BQPS-I units, whose licenses expired in August 2024. KE has requested NEPRA to extend the operational life of these units by three years until a new coal plant is expected to be operational by FY 2027.
KE emphasized the need to retain these units to ensure reliable power generation amidst possible outages and fuel shortfalls. Operating BQPS-I units would help avoid reliance on more expensive High-Speed Diesel (HSD).
Prior to its FCA petition for May 2024, KE had been claiming costs for part load adjustments and startup charges. NEPRA has been approving these requests based on mechanisms established in the Multi-Year Tariff (MYT) for FY 2017 to FY 2023. Starting in May 2024, KE has requested fuel costs based on parameters set in its MYT for FY 2017-2023. Any future adjustments resulting from revised parameters under the new MYT for FY 2024 to FY 2030 will be considered in subsequent adjustments once the new MYT is approved.
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