Following a massive social media outrage on tariff hike, K-Electric (KE) has launched an online Fuel Cost Adjustment (FCA) on its website. The cost adjustment calculator allows consumers to compute the total impact on their monthly bills based on consumption.
KE announced this in a statement on Sunday.
The FCA is based on a notification issued by National Electric Power Regulatory Authority (NEPRA) through an SRO dated 27 December 2019, which defines both the amount and the period over which the amount is to be adjusted. All details related to FCA would also be provided in respective customer bills.
It mentioned that the pending adjustments will also be added to the consumers’ bills, adding that the adjustments will be spread over nine months starting from January 2020 onwards.
The practice is part of the NEPRA mechanism, as the fuel is a ‘pass-through cost’ to consumers of all power distributors in Pakistan, and KE is no exception.
As per NEPRA mechanism:
A reference fuel cost is considered in determining the tariff, and any increase or decrease in actual fuel price compared to this reference cost is adjusted after verification by NEPRA, which is subsequently passed on to the consumers.
It maintained that no cost-adjustment was passed on to consumers from July 2016 to June 2019 as KE’s Multi-Year Tariff (MYT) policy was facing a delay.
Karachi’s sole power company said that it has been bearing the additional cost caused by fuel adjustment for the last three years, increasing its financial cost on account of increased borrowing.
KE said that the new MYT was notified by the Ministry of Energy (Power Division) in May last year, and the company’s monthly and quarterly tariff variations are based on it. The confirmation was given during a public hearing by NEPRA in August 2019.