K-Electric seeks reduction in power tariff under FCA

ISLAMABAD: The electricity price is likely to decrease for K-Electric consumers under the monthly fuel charge adjustment (FCA).

The National Electric Power Regulatory Authority (NEPRA) concluded a public hearing on December 12, 2024, regarding K-Electric’s petition for a provisional monthly fuel charge adjustment (FCA) for October 2024.

The expected relief of Rs461 million will translate to a reduction of 27 paisas per unit in customer bills.

NEPRA will issue its decision clarifying the FCA amount to be passed on and the month in which it will be charged to customers’ bills.

Fuel charge adjustments reflect variations in global fuel prices and changes in the generation mix. These adjustments are applied to customer bills only after NEPRA’s detailed scrutiny and approval.

Customers benefit from negative FCAs in their bills during periods of declining global fuel prices. The rates applied are determined by NEPRA and notified by the federal government.

The primary driver of this FCA relief stems from the decline in international fuel prices and better use of the generation mix.

K-Electric said in a statement that “during October 2024, the generation on expensive Furnace Oil was reduced, RLNG was utilized on efficient power plants and the power purchased from CPPA-G was increased (as compared to reference month) to ensure lower cost of generation”.

Earlier, Karachi electricity consumers raised multiple grievances during a NEPRA hearing on K-Electric’s right-of-claims, highlighting severe challenges faced by Karachi’s residents and businesses.

During the hearing, consumers lamented that operating businesses in Karachi has become increasingly difficult due to high electricity costs. “Hundreds of factories have already shut down, and many more are on the verge of closure due to unaffordable power rates,” one consumer stated.

It was pointed out that Karachi’s electricity users are being burdened with surcharges intended to reduce the circular debt. “We categorically reject any additional burden in the form of right-of-claims or other charges,” said a consumer.

Another consumer warned that imposing additional surcharges could lead to law-and-order issues in the city. Questions were also raised about the effectiveness of K-Electric’s privatization.

“What was the purpose of privatization, and has it been achieved? K-Electric continues to produce expensive electricity while benefiting from tariff differential subsidies,” one attendee asked.

Despite granting multiple margins to K-Electric, the issue of escalating right-of-claims persists, leaving consumers frustrated and questioning the overall efficiency of the power utility.

The hearing underscored growing discontent among Karachi residents over the rising cost of electricity and the impact on the city’s economy.