ISLAMABAD: The National Electric Power Regulatory Authority (NEPRA) held a public hearing on October 31, 2024, to review a petition by K-Electric (KE) for a provisional monthly fuel charge adjustment (FCA) for September 2024. If approved, the requested adjustment would provide an anticipated relief of PKR 247 million, which translates to a reduction of PKR 0.16 per unit for consumers in KE’s service area.
Fuel charge adjustments, such as this one, reflect the varying global fuel prices used for electricity generation and changes in the generation mix. These adjustments are passed on to consumer bills based on NEPRA’s approval, ensuring that utilities recover fuel costs without adding extra financial burdens on customers. Conversely, when global fuel prices fall, the FCA mechanism provides negative adjustments, delivering cost savings to consumers.
During the hearing, NEPRA examined KE’s justification for the relief, which is rooted in recent declines in global fuel prices and efficiencies in KE’s generation mix for September. The regulator reviewed technical data to assess whether KE’s calculations for the adjustment align with the actual variations in fuel expenses. Following this public hearing, NEPRA will issue a decision that confirms the specific FCA rate to be applied to consumer bills, as well as the duration of the adjustment period.
The fuel charge adjustment mechanism, overseen by NEPRA, has become a regular component of Pakistan’s electricity billing process, helping to align consumer costs with actual fuel expenditure in the power sector. This regulatory review ensures transparency and protects consumers from undue costs. Adjustments are implemented after NEPRA’s scrutiny and subsequent approval by the federal government, ensuring they are fair and justified.
K-Electric’s role as Karachi’s sole power provider means that its operational costs, including fuel expenses, have a direct impact on the city’s residents and businesses. Established in 1913 as Karachi Electric Supply Company (KESC), KE is Pakistan’s only vertically integrated power utility and serves Karachi along with its surrounding areas. After its privatization in 2005, KE has operated under KES Power, a consortium that holds 66.4% of KE’s shares, while the Government of Pakistan maintains a 24.36% shareholding. The remainder of KE’s shares are listed as free-float stock on the public market.
By streamlining the FCA process, NEPRA aims to maintain a balanced approach that accommodates the fuel cost realities of electricity providers like KE, while striving to shield customers from abrupt price hikes. As consumers await NEPRA’s decision, the proposed PKR 0.16 per unit reduction offers a measure of relief amid the wider economic challenges that households and businesses face today.
