ISLAMABAD: K-Electric (KE) has sought a provisional negative adjustment of Rs 5.02 per unit under the monthly Fuel Cost Adjustment (FCA) mechanism for March 2025, which would result in a refund of Rs 6.792 billion to its consumers.
According to the National Electric Power Regulatory Authority (NEPRA), KE submitted in its calculation sheet (Note-2) that, following the determination of generation tariffs for its power plants post-June 2023, it has provided data related to partial load, open cycle operations, degradation curves, and startup costs. KE has sought approval for Rs 15.6 billion covering the period from July 2023 to March 2025.
Out of this amount, NEPRA has already set aside Rs 13.282 billion in its FCA decisions for the months of November 2024 to February 2025, which implies that NEPRA will further set Rs 2.318 billion in March to clear the backlog and consumers will get refund of Rs 4.474 billion.
The main reason of substantial reduction in FCA is that the power utility company received about 1650 MW electricity from the national grid and consumed its own generation about 800 MW.
KE has also requested that NEPRA consider adjusting the accumulated actual fuel cost variations—specifically related to partial load, open cycle operations, degradation, and startup costs—from the negative fuel cost variation pool. This, KE argues, would ensure that consumers are not burdened with these costs at a later stage.
NEPRA has scheduled a public hearing on May 22, 2025 to deliberate on the proposed adjustment.
For deliberation during the hearing, following issues have been framed which are as (i) whether the requested FCA is justified; (ii) whether KE has followed the merit order while giving dispatch to its power plants as well as power purchases from external sources; and (iii) whether the request of KE to consider adjustment of accumulated actualization of fuel cost on account of partial load, open cycle and degradation curves along with startup cost from July to Dec. 2024, from the negative fuel cost variation is justified?.
In an additional note on the FCA determination for February 2025,, Member (Tech), Rafique Ahmad Shaikh had stated that the successful enhancement of the interconnection between K-Electric (KE) and the National Transmission and Despatch Company (NTDC) to a safe operating limit of 1,600 MW is a commendable step.
However, efforts to further increase this capacity to 2,000 MW and beyond—originally targeted for completion by June 2024—remained incomplete. In February 2025, the fuel cost in KE’s generation mix stood at Rs. 20.01/kWh, significantly higher than NTDC’s average of Rs. 8.23/kWh. If the interconnection capacity had been upgraded as planned, increased reliance on NTDC’s lower-cost surplus power could have further reduced
the Fuel Cost Adjustment (FCA), easing the financial burden on consumers. In light of the current surplus of economical generation within the NTDC system and the high cost of KE’s internal generation, it is imperative that the interconnection upgrade be completed without further delay.
