2020 started off with some bad news including a hike in petroleum prices at a time when food inflation is stubbornly high. The new hike added fuel to the fire for the overall inflation in the country.
In Karachi, the public will also face additional pressure after the increased power tariffs announced by the power regulator, NEPRA.
While at first, the news of Rs. 1.4/kWh was reported by the media, later, a part of the media said that there were further adjustments of Rs. 4.8/kWh. The two numbers have confused K-Electric’s customer base of 2.5 million in Karachi who are worried about their consumption of electricity.
Here are some facts that may remove the confusion and give you a little peace of mind towards your electricity consumption.
First and foremost, the hike in tariff called Fuel Cost Adjustment (FCA) is not Rs. 4.8/kWh, nor does it stand at Rs. 1.4/kWh. It is not a constant number for all segments of customers but varies by consumption.
The FCA differential amounts range between Rs. -1.2/kWh to Rs. 2.09/kWh, due to which the actual impact per month is likely to be less than Rs. 0.44/kWh
The increase in the tariff is not an additional burden in your monthly bill but it is an amount which you have not paid to K Electric for three years from July 2016 to June 2019. It means Karachiites were paying lower bills as compared with the rest of the country. The reason for the late adjustment is the delay in the tariff notification by Nepra by three years. So you will simply pay your old bills with upcoming bills.
Don’t be scared, the increase will not last forever but for the next 9 months only. In fact, FCA will pay back money to a segment of customers.
The FCA is based on the actual cost of fuel that was used to produce electricity. It means customers will pay for adjustments during the period in which the cost of fuel remains higher than a reference price whereas they are also paid back an amount if the fuel costs are lower than the reference price.
Thus, customers pay only for actual verified costs. As per NEPRA, in 15 out of 36 months, customers actually stand to receive money, while in the remaining 21 months, they will have to pay the additional amount. However, according to NEPRA, these fuel costs were incurred by K-Electric over 36 months and have to be adjusted in customer bills in the next 9 months, meaning customers will end up paying 2-6 months’ adjustments in a single month.
Fuel Cost Adjustments will be made on the basis of old units consumed from July 2016 to June 2019.
Based on NEPRA’s mechanism, the calculation for FCA will be based on the fuel cost observed from 2016 to 2019. If you don’t remember how much electricity you used back in August 2017, you may want to use the FCA calculator which has been developed by K-Electric to help customers calculate their cost impact.