K-Electric Seeks Clarity from NEPRA on Fuel Cost Adjustment for April 2024

News Desk2 weeks ago

NEPRA is currently considering KE’s multi-year tariff; therefore, in order to enable prompt cost recovery, the utility has proposed an FCA based on three scenarios and asked for approval of any one of these scenarios for consideration by the authority. This will help determine the provisional FCA for April 2024.

Utilities pay Fuel Charge Adjustment (FCA) as a result of shifts in the generating mix and worldwide fluctuations in the cost of the fuel used to produce electricity. Customers are charged for these expenses after NEPRA has reviewed and approved them. Fuel price fluctuations and the use of fuel sources according to economic merit order are the reasons behind the request for FCA.

Read more:K-Electric Accused of Overbilling Government

Below is a summary of the three cases:

Interim Tariff Difference: In accordance with KE’s proposal, the FCA should be determined by subtracting the actual fuel cost from the monthly fuel cost referenced by the interim tariff. This will result in a reduction of Rs. 1.18 per unit.

Ongoing Petition Adjustment: It has been proposed that the tariff petition submitted by KE and presently being discussed by NEPRA take into account the discrepancy between the actual and reference monthly fuel costs. This would result in an increase of Rs. 0.44 per unit.

Annual Cost Comparison: KE suggests that the tariff petition it submitted, which is presently being reviewed by NEPRA, take into account the difference between the actual fuel cost and the annual weighted average fuel reference prices. This would result in a reduction of Rs. 0.74 per unit.

After the hearing, NEPRA will publish a notification outlining the formula for calculating the FCA and provide guidance on how these modifications should be applied to customer bills.

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