ISLAMABAD : National Electric Power Regulatory Authority (NEPRA) on Friday released determinations on distribution and transmission tariffs of KE for FY 2024- 25 under seven years Multi Year Tariff Regime ( 2024-25 to 2029-30, after receiving go ahead signal from Task Force on Power and other relevant forums.
NEPRA which claims itself an independent Regulator waited for the green signal of real prayers after months of wait.
The determinations were released just a day after NEPRA officials grilled K-Electric over alleged load-shedding in Karachi, the Authority issued decisions on the power utility’s transmission and distribution network tariff petitions for the control period from FY24 to FY30.
These decisions have come after the multi-year tariff expired on June 30, 2023.
KE had filed separate petitions for its generation, transmission, distribution and supply tariffs. The Authority communicated the generation tariff earlier, and has now conveyed the distribution’s network component as well as the transmission tariff.
While these determinations are different from the electricity rates charged to consumers – these are governed under the uniform tariff policy applicable across Pakistan – it gives KE a roadmap on its future allowed cost and ability to plan ahead on its investment in infrastructure and enhancing capabilities.
On the transmission side, KE requested a total tariff of Rs2.9871/kWh, according to NEPRA documents. In the NEPRA order, KE has been allowed Rs43.447 billion which translates to Rs1,348.66/kw/month.
On the distribution network side, KE requested a total tariff of Rs3.8357/kWh, while NEPRA allowed for a total average tariff of Rs3.31/kWh.
It is also pertinent to note that K-Electric had requested a return on equity of 16 percent for its distribution segment, but NEPRA approved it at 14 percent significantly lower than requested by K-Electric. Similarly, the return on equity for transmission was approved at 12 percent, down from KE’s requested 15 percent.
In the NEPRA documents, KE submitted that despite a challenging operating environment, through investments of USD 4 billion into the infrastructure since privatization, KE has improved generation efficiency and reduced T&D losses which resulted in decrease in tariff requirements by PKR 113 billion and PKR 155 billion.
In addition, pre-privatization KE was being provided annually PKR 10 billion as operational subsidy that has now been completely eliminated, the company submitted.
An initial assessment highlights that NEPRA has allowed lower Return on Equity (RoE) than what K-Electric had requested based on the already allowed level.
Interestingly, a day earlier during a hearing held on FCA, NEPRA officials had criticised KE over alleged load-shedding and its distribution and transmission network. However, it did not mention that the tariff petitions had stayed pending with it for months.
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