K-Electric (KE) has requested the National Electric Power Regulatory Authority (NEPRA) to raise its power tariff to Rs. 5.27 under the monthly Fuel Cost Adjustment (FCA) for March 2022.
The NEPRA will conduct a public hearing on 27 April to discuss this petition.
The major impact on the monthly FCA for March is due to an increase in the prices of furnace oil and RLNG. This increase is primarily driven by a 40 percent increase in the price of RLNG from December 2021 (reference month) whereas the price of furnace oil in March 2022 increased by 10 percent from December 2021.
The FCA is incurred by utilities due to global variations in the prices of fuel that are used to generate electricity and changes in the generation mix. These costs are passed on to the consumers after the NEPRA’s scrutiny and approval.
Consumers also receive a benefit when the cost of fuel decreases. In both cases, there is no impact on KE’s profitability as these are simply operational expenses being recovered.
This request is in line with the mechanism in KE’s Multi-Year Tariff, whereby changes in the prices of fuel, generation, and the power purchase mix are passed on with certain annual adjustments.
If the NEPRA allows this increase, KE’s consumers will be burdened with an additional Rs. 8.59 billion that will be recovered in the billing for May.
