ISLAMABAD: The National Electric Power Regulatory Authority (NEPRA) is set to address the long-standing issue of write-off claims amounting to Rs 68 billion by K-Electric (KE) for the period from FY 2017 to FY 2023. A public hearing is scheduled for today, December 10, where stakeholders, including business community representatives, will engage in an open debate on the matter.
Sources suggest that NEPRA is likely to approve write-offs of approximately Rs 50 billion. However, disputes may arise among Authority members regarding the approval of write-offs in the future.
The issue of write offs has already been discussed at very high in the SIFC aimed finding a way out of this issue to satisfy the investors.
NEPRA has outlined several key issues for KE to address during the public hearing, as follows:
- Write-off Claim for Period Prior to FY 2016-17: K-Electric was allowed to claim write-offs for the control period of the Multi-Year Tariff (MYT) from FY 2016-17 to FY 2022-23. Can KE claim write-offs for periods before FY 2016-17?
- Provision for Doubtful Debt: K-Electric deducted provisions for doubtful debt from profits in some years while calculating clawback, resulting in a lower clawback amount. Can KE claim the same doubtful debts as write-offs again?
- Hook Connections and Law Enforcement Margin: KE was allowed a 5.2% margin in the base case to cover losses from hook connections. Can KE claim non-recovery of bills for hook connections, which were disallowed in previous MYTs?
- Recovery Efforts: KE was required to make all reasonable efforts to recover the amounts being written off. However, KE has not initiated legal proceedings for recovery of bills less than Rs. 10 million, according to the available framework. Is this legally justified?
- Taxes and Duties on Write-offs: NEPRA’s tariff does not account for duties and taxes on bills. However, KE has included taxes and duties on unpaid bills in its write-off claims. Can KE include taxes and duties in write-offs?
- Consumer Service Manual Compliance: Is KE required to follow the provisions of the Consumer Service Manual regarding connections, disconnections, reconnections, and recoveries related to write-offs?
- Duration of Under-Recoveries: Can KE claim bills that are only a few months old as under-recoveries/write-offs? What should be the acceptable duration for such claims?
- CNIC Requirement for Defaulting Consumers: Is KE required to provide the CNIC numbers of consumers who have defaulted on their bills and whose accounts are included in the write-off claims?
- Reconnection without Bill Recovery: Can KE claim write-offs for consumers whose connections were reconnected without recovering the outstanding bills?
- Non-recovered Bills After Two Months: Can KE claim write-offs for bills related to electricity supplied for more than two months, as electricity is typically disconnected after two months of non-payment, and equipment is removed after three months?
- Approval of Write-off Terms by NEPRA: NEPRA has not approved the terms of reference for write-offs, even though the amounts will be charged to consumers or covered by the government as a subsidy. Can KE now, or in the future, claim write-offs based on terms approved by its board of directors but not vetted or approved by NEPRA, with NEPRA automatically adding this to the tariff?
- Compensation for Under-recoveries: Can KE be allowed to benefit from a cost/under-recovery that has been previously compensated through write-offs?
- Inclusion of Discounts and Corrections: KE’s write-off claims include amounts for discount schemes offered to defaulting consumers, as well as corrections and detections of bills. Can KE claim these discounts and corrections as part of the write-offs?
- Other Issues: Any other issues that may arise during the proceedings, with NEPRA’s approval.
