Karachi, December 28, 2024 – Electricity consumers in Karachi are set to receive a substantial refund of over Rs 7 billion as K-Electric (KE), the city’s primary power utility, has filed a petition with the National Electric Power Regulatory Authority (Nepra) seeking approval to refund Rs4.98 per unit. This refund comes as part of the monthly fuel charges adjustment (FCA) for November 2024.
The electricity utility’s proposal outlines a refund totaling approximately Rs7.179 billion, which, if approved, will be reflected in the billing cycle for February 2025. This adjustment follows higher per-unit electricity rates charged in November. It is worth noting that Nepra had previously directed KE to refund Rs0.1758 per unit in December 2024 under September’s FCA and Rs0.27 per unit for October’s FCA.
Nepra has scheduled a public hearing for January 15, 2025, to assess KE’s latest petition. The hearing will evaluate two critical aspects: the justification for the requested FCA and whether KE adhered to the established merit order while generating electricity from its power plants and purchasing from external sources.
If the adjustment is approved, it will apply to all electricity consumer categories except lifeline consumers, domestic users consuming up to 300 units, electric vehicle charging stations, prepaid electricity users, and agricultural consumers. However, domestic consumers with Time of Use (ToU) meters will benefit from the negative adjustment regardless of their consumption levels.
In its petition, K-Electric emphasized that the adjustment aligns with Nepra’s prior decisions on provisional FCAs for the period between July 2023 and June 2024. KE’s calculations are based on the interim tariff set in March 2023, with adjustments pending the finalisation of the Multi-Year Tariff (MYT) for 2024-2030.
Despite this development, KE has faced criticism for relying on outdated gas-guzzling power plants, which produce expensive electricity. These inefficiencies result in higher electricity costs for consumers and necessitate significant government subsidies to maintain uniform pricing. Stakeholders have also questioned Nepra’s oversight, highlighting the absence of assessments on KE’s plant efficiency and heat rates.
Additionally, the federal government has opposed KE’s proposed tariff hike for 2024-2030, deeming it inflated and unrealistic. The government recommends reducing the tariff from Rs44.69 to Rs34.87 per unit by addressing inefficiencies and implementing cost-saving measures. These include sourcing more electricity from the national grid, adopting a “take-and-pay” model for generation contracts, and tying the return on equity to the Pakistani rupee.
Officials estimate that these reforms could save billions annually, reducing the financial burden on consumers while ensuring greater transparency and operational efficiency in electricity generation and distribution.
