The National Electric Power Regulatory Authority (Nepra) approved an increase in K-power Electric’s rates of Rs12.68 per unit on Monday as part of a quarterly tariff adjustment (QTA) for the period of April to June FY2021-22, resulting in a net increase in revenue of about Rs56 billion for the private utility based in Karachi.
Due to the government’s policy of uniform tariffs, under which the same electricity rates are imposed nationwide to customers of all distribution companies, including KE, the decision is unlikely to have an impact on consumers in Karachi. However, in order to maintain uniform rates for all distribution businesses, the federal government is expected to bear the increased financial burden through differential tariff subsidies paid out of the budget.
This was reaffirmed by the regulator in a somewhat evasive statement hit. The government “maintains a uniform tariff across the country as per practise, and normally the disparity is compensated by subsidies,” it stated.
For the fourth quarter (April to June) of FY 2021–22, the KE initially wanted QTA of Rs. 14.85 per unit, but then reduced it to Rs. 14.533/kWh. After a brief public hearing and data exchange on August 31, the regulator approved a 12.68 rupee per unit increase in QTA. The regulator claimed that roughly Rs19bn in write-off amounts for unrecoverable invoices required more investigation and data reconciliation, which is why the authorization for lower QTA was granted.
The regulator stated that more thought was needed in light of the preliminary review of the disclosed consumer-wise information of write-offs and the answer provided by the KE’s auditors. As a result, the Rs 14.5 billion in write-offs that KE claimed, including the sum that was previously included in the price, had not been accounted for in QTA workings. The Rs4.04bn sum that was already included in the price had also been taken out. It stated that the regulator “would decide the matter properly.”
