KARACHI – K-Electric is gearing up to increase the financial burden on consumers, seeking approval from the National Electric Power Regulatory Authority (NEPRA) for a substantial Rs 10.69 per unit hike in the base electricity tariff.
The proposed increase would elevate the rate from Rs 34 to Rs 44.69 per unit under a multi-year tariff plan spanning from 2023 to 2030.
The Karachi-based utility’s ambitious proposal outlines a comprehensive structure, incorporating various cost components essential for its operations. Central to K-Electric’s proposal is the Energy Purchase Price (EPP) component, pegged at Rs18.88 per kWh, which would be subject to monthly and quarterly adjustments based on fluctuating power costs.
Moreover, the Capacity Purchase Price (CPP) component is projected at Rs 12.54 per kWh, with provisions for quarterly revisions. Additional charges include a Transmission Charge of Rs 3.48 per kWh and a Distribution Charge of Rs 3.84 per kWh. Operational and Maintenance (O&M) costs are calculated at Rs 0.42 per kWh, indexed annually to the Pakistan Consumer Price Index (CPI). The Retail Margin is estimated at Rs 0.59 per kWh, also adjusted yearly based on revenue recovery.
Further, the Recovery Loss Allowance, designed with a cap and floor mechanism for under/over recovery, is set at Rs 2.88 per kWh. The Working Capital component stands at Rs 2.07 per kWh, with annual adjustments to account for recovery scenarios. Despite these proposed adjustments, K-Electric asserts that the actual prices billed to customers will remain regulated by the government through a uniform tariff policy, ensuring consistency across various consumer categories.
NEPRA has invited stakeholders and the public to submit comments within seven days from the notice, ensuring a transparent regulatory process before finalizing any tariff adjustments. In its statement, K-Electric emphasized that the proposed tariff adjustments are essential for sustaining its operations and maintaining reliable electricity supply. The company reassured consumers that the requested tariff hike would not directly affect their monthly bills, as the government’s uniform tariff policy would continue to govern the final charges.
As a vertically integrated utility managing generation, transmission, and distribution, K-Electric’s proposed costs cover almost 90 percent of its operational needs. These adjustments are crucial for ensuring an uninterrupted and efficient supply of electricity to homes and businesses across Karachi.
K-Electric’s Multi-Year Tariff petition, currently under NEPRA’s deliberation, underscores the utility’s commitment to enhancing efficiency and service reliability through innovative technologies and targeted investments. The decision on this significant tariff hike is awaited with keen interest by all stakeholders, as it will have far-reaching implications for consumers and the energy sector at large.
