Latest news with #Multi-YearTariff
Business Recorder
19-07-2025
- Business
- Business Recorder
Nepra issues pending notifications for KE tariffs
ISLAMABAD: The National Electric Power Regulatory Authority (NEPRA) has issued pending notifications for K-Electric's (KE) supply, distribution, and transmission tariffs for the period 2023–24 to 2029–30 under the Multi-Year Tariff (MYT) regime, stating that the federal government's pending review motion does not legally restrain the regulator from notifying its earlier determinations. Previously, the federal government was responsible for issuing tariff notifications. However, amid prolonged delays and under pressure from the International Monetary Fund (IMF) and the World Bank, the law was amended in 2021, granting NEPRA the authority to notify tariffs directly. 'It is now the duty of the Authority to issue the requisite notifications of its determinations if the government fails to do so or if any reconsideration request remains pending,' official sources said. Under Rule 31 of the NEPRA Act, the Authority can issue such notifications if the federal government does not act within the specified time. DISCOs and KE: Nepra approves revised average uniform SoT Although the government's review motion is still under consideration, NEPRA clarified that if it revises its previous determinations, the tariffs will be amended accordingly. In a related development, Deputy Prime Minister and Foreign Minister Ishaq Dar recently chaired a high-level, confidential meeting to discuss KE's ownership issues involving Al-Jomaih, following a strongly worded letter from Pakistan's Ambassador to Saudi Arabia. KE's average power supply tariff has been fixed Rs 39.97 / kWh which includes power purchase excluding transmission cost of Rs 31.96 per unit, transmission cost of Rs 2.86 per unit, distribution cost Rs 3.31 per unit, supply margin Rs 2.28 per unit and Prior Year Adjustment negative Rs 0.44 per unit. The power utility company's total revenue requirement is estimated to be Rs 606.920 billion, for FY 2023-24, of which supply margin will be Rs 34.681 billion, O&M cost Rs 5.91 billion, working capital negative Rs 1.244 billion, recovery loss, Rs 36.253 billion, gross margin Rs 40.921 billion, other income negative Rs 6.240 billion, net margin Rs 34.681 billion and prior year adjustment negative Rs 6.690 billion. The Authority also considering the fact that FY 2023-24 has already lapsed and FY 2024-25 is almost 11 months gone, also obtained ICE's actual recovery ratios for the FY 2023-24 and FY 2024-25. As submitted by KE its actual recovery for the FY 2023-24 remained at 91.50%, whereas FY 2024-25 is expected to close at 90.50%. The financial impact of under recovery of 8.50% for FY 2023-24 and 9.50% for FY 2024-25, as reported by KE, is around Rs.40 billion and Rs.57 billion respectively. The Authority noted that return allowed to KE for its distribution function is around Rs.21.6 billion, meaning thereby that effectively KE would be incurring losses for the first 02 years of MYT, if no recovery loss is allowed to KE. This may compromise the financial viability of the company, which is neither in the interest of the consumers nor power system as whole. In another notification NEPRA has approved distribution tariff of Rs 3.31/ kWh and Rs 2.684 / kWh for investment of Rs 43.447 billion during the validity of MYT. Copyright Business Recorder, 2025
Mint
02-07-2025
- Business
- Mint
Maha power regulator puts controversial order on hold after solar cos move court
Mumbai: The Maharashtra Electricity Regulatory Commission (MERC) has assured the Bombay High Court that it will not implement till 14 July its order that green power producers complain makes it difficult to supply excess electricity to the grid for later retrieval. The move comes after a consortium of renewable energy developers challenged the decision, saying it would cripple their ability to provide round-the-clock low-cost power, rendering them uncompetitive. The court was hearing a plea filed by the National Solar Energy Federation of India (NSEFI), JSW Neo Energy Ltd, and nine other solar developers including Sunsure Solar Park MH One Pvt. Ltd and Solenco Solar Park MH-V Pvt. Ltd. The developers have called MERC's decision arbitrary, unlawful, and detrimental to the commercial viability of clean energy projects in the state. MERC, along with the Maharashtra State Electricity Distribution Company Ltd (MSEDCL), submitted that it would not enforce the contested provisions until mid-July. 'The aforesaid statement is accepted as an undertaking given to this court. In light of the aforesaid statement, we find that at this stage, the petitioners are adequately protected and hence, no further ad-interim relief is passed in the above petitions,' the court said on 1 July. In addition to MERC's 25 June order, the developers have challenged Regulation 115 of the Multi-Year Tariff (MYT) Regulations, 2024, which empowers distribution companies to propose new Time-of-Day (ToD) slots and tariffs. The core issue before the court stems from MERC's reversal of its March 2024 decision that allowed consumers to draw banked solar power across different ToD slots—enabling both operational flexibility and financial efficiency. Under the revised rules, solar energy banked during, say, 9 am to 5 pm, must be consumed strictly within that window, significantly diminishing the value of banking. This makes the supply of renewable power to commercial and industrial (C&I) customers more expensive for solar companies. This is because solar power is generated in excess during the morning and afternoon hours when the sun shines the brightest. The excess power during this period is supplied to the grid and drawn by MSEDCL. Later, when the C&I customer needs power when the sun sets, it tends to draw it back from the grid at a nominal fee, usually about 8-10% of the power banked. Solar producers fear that a change to the banking structure would jeopardize their long-term power supply agreements with C&I consumers as the cost increases. MSEDCL proposed to change the banking structure as it was getting more expensive for it to supply the power back during non-solar hours from other sources. India suffers from insufficient capacity to store its solar power. In the court, developers argued that MERC enacted the change without public consultation, a legal requirement in tariff matters, thereby breaching principles of natural justice. 'The review petition (filed before MERC) was neither made available to the stakeholders nor were the stakeholders permitted to address any arguments,' the petition reads, calling the process a 'complete go-by to the established principles of law.' They also contend that their intervention applications, which sought a hearing in the review proceedings, were dismissed without explanation. The petition states that nearly 600 MW of solar capacity in Maharashtra is affected by the order. The developers are seeking to quash both the 25 June directive and Regulation 115, arguing that the latter unlawfully delegates tariff-setting authority to distribution companies. Legal experts say the case raises broader questions around regulatory accountability and administrative fairness. 'The failure of MERC to provide due process, such as adequate hearing or consultation, before issuing a significantly impactful review order constitutes a direct infringement of the petitioners' fundamental legal right to fair administrative action,' said Kunal Sharma, founder and managing partner at Taraksh Lawyers & Consultants. He noted that while the petition does not directly challenge Regulation 115, the court could still strike down the order on procedural or jurisdictional grounds. 'The petition derives substantial force from the argument that the revised banking provisions are inconsistent with the existing DOA Regulations and that MERC acted beyond the scope of its limited review jurisdiction,' Sharma said. Sachit Mathur, managing partner at Emerald Law, offered a different view, suggesting the review order could hold if MERC's rationale is sound. 'With respect to the ToD tariff and banking provisions, the Commission's reliance on review jurisdiction may withstand scrutiny. In particular, the omission of Regulation 20.3 could plausibly qualify as an error apparent on the face of the record,' Mathur said. MERC maintains that the review order is a clarification, aligning the tariff framework with earlier regulatory processes. It insists that stakeholder input had been taken during the original MYT proceedings and that repeat consultation during the review is not mandatory. It also warned that granting relief solely on procedural grounds could set a sweeping precedent.
Business Recorder
25-06-2025
- Business
- Business Recorder
Karachi
Karachi appears to be Pakistan's orphaned child. Once the country's capital, it now holds the dubious distinction of being among the most unliveable cities in the world. Despite contributing over 20% to Pakistan's GDP and hosting around 10% of the nation's population, Karachi struggles significantly to complete critical projects like the BRT and K-4 water supply schemes. Videos highlighting its crumbling infrastructure became memes during the recent India-Pakistan clash, which speaks volumes. For decades, Karachi has absorbed a continuous influx of migrants from various regions of Pakistan, expanding rapidly and without adequate planning, thus becoming a hub for crime and unrest. Despite these challenges, the city has remained Pakistan's economic backbone, functioning as the nation's industrial centre and sole significant link to the global supply chain for seven decades. In short, Karachi has the potential to pull Pakistan out of its financial difficulties with minimal effort—provided it receives proper attention and prioritization. Instead, it consistently receives minimal support. Political parties routinely stage protests against the federal government for neglecting Karachi, yet minor changes. Consider the energy sector, for instance. Karachi hosts the country's only privatized power utility, K-Electric (KE). According to recent communications, KE has become the most improved DISCO since 2009 regarding transmission and distribution losses, reducing its aggregated technical and commercial losses from a staggering 43.2% to approximately 20.3% by 2024. Within Karachi alone, the exempted feeder network increased dramatically from a mere 6.6% to 70%. These achievements, supported by a complete management turnaround, have gained global recognition, including a Harvard Business School case study and positive World Bank reports. However, despite these notable improvements, KE faced significant setbacks, such as delays in the Multi-Year Tariff determination, hindering its financial planning. The private utility, intended as a model for other DISCO privatizations, was inexplicably left in limbo, ultimately punishing Karachi residents more than the company itself. Another example is the denial of Fuel Cost Adjustment (FCA) relief—a substantial amount of Rs4.69 per unit—to KE's customers in a recent NEPRA hearing. The justification given was to maintain a uniform tariff across the country, exemplifying bureaucratic rigidity and the shortsighted decisions of temporary ministers. Karachi is also burdened with inefficiencies from other DISCOs. For nearly two years, Karachi's consumers have borne the Power Holding Limited (PHL) surcharge—debt repayment they did not contribute to or benefit from. Now, due to a new banking agreement, this surcharge is extended for another six years, meaning 72 more months of inflated electricity bills for Karachi residents. Even if the government manages to find buyers for its other DISCOs—a considerable challenge—the current treatment of KE sends a negative message. Potential buyers witnessing such hurdles and neglect may reconsider their interest, fearing similar treatment. Karachi deserves better.
Business Recorder
25-06-2025
- Business
- Business Recorder
MYT mechanism: Nepra lowers average tariff to Rs34 for Discos
ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) has reduced national average tariff by 4.2 percent to Rs 34 per unit from Rs 35.50 per unit of 2024-25 for power Distribution Companies (Discos) for FY 2025-26 under Multi-Year Tariff (MYT) mechanism to be applicable from July 1, 2025. The Regulator has determined separate tariffs for the Discos based on their approved revenue requirements, which also includes Power Purchase Price (PPP). However, it is unclear if the Discos or GoP will approach the Regulator for review of determinations. NEPRA approves K-Electric's MYT for supply segment The determined average tariffs of different Discos are as follows: (i) Islamabad Electric Supply Company (IESCO)- average tariff Rs 29.28/kWh, revenue requirement, Rs 340.523 billion, PPP tariff, Rs 23.9851/kWh, total PPP amount Rs 300.896 billion;(ii) Gujranwala Electric Power Company (GEPCO), average tariff Rs 33.82/kWh, revenue requirement, Rs 380.412 billion, PPP tariff Rs 29.9231/kWh, total PPP amount Rs 319.942 billion;(iii) Faisalabad Electric Supply Company (FESCO), average tariff Rs 32.69/kWh, revenue requirement Rs 471. 717 billion, PPP tariff 26.0226/ kWh, total PPP amount Rs 408.406 billion; (iv) Lahore Electric Supply Company (LESCO) average tariff Rs 31.18/kWh, revenue requirement Rs 737.216 billion, PPP tariff Rs 25.1463/kWh, total PPP amount Rs 650.996 billion; (v) Multan Electric Power Company (MEPCO), average Rs 34.68/kWh, revenue requirement, Rs 595.696 billion, PPP tariff Rs 26.5094/kWh, total PPP amount Rs 513.580 billion; (vi) Peshawar Electric Supply Company (PESCO), average tariff Rs 37.20/kWh, revenue requirement, Rs 342.268 billion, PPP tariff Rs 26.1682/kWh, total PPP amount Rs 298.213 billion; (vii) Quetta Electric Supply Company (QESCO), average tariff Rs 41.54/kWh, revenue requirement, Rs 201.644 billion, PPP tariff Rs 29.8509/kWh, total PPP amount Rs 168.115 billion: (viii) Sukkur Electric Supply Company (SEPCO), average tariff Rs 35.63/kWh, total revenue requirement, Rs 120.739 billion, PPP tariff Rs 27.213/kWh, total PPP amount Rs 110.213 billion; (ix) Hyderabad Electric Supply Company (HESCO), average tariff Rs 44.36/kWh, revenue requirement, Rs 173.408 billion, PPP tariff Rs 32.6312/kWh, total PPP amount Rs 173.408 billion; (x) Tribal Areas Electric Supply Company (TESCO), average tariff, Rs 44.93/kWh, revenue requirement, Rs 61.391 billion, PPP tariff Rs 39.3703/kWh, total PPP amount Rs 59.045 billion ; and (xi) Hazara Electric Supply Company (HAZECO) average tariff, Rs 33.49/kWh, revenue requirement, Rs 74.532 billion, PPP tariff Rs 24.0776/kWh, total PPP amount Rs 63.340 billion. NEPRA has projected a modest 2.8% growth in electricity demand for the fiscal year 2025-26, significantly lower than the 5% forecast made by the Central Power Purchasing Agency-Guaranteed (CPPA-G). This projection is based on recent trends of stagnant or declining demand, as actual generation data for the last two fiscal years showed either negative or flat growth. In its latest determination, NEPRA approved a projected average Power Purchase Price (PPP) of Rs 25.06 per unit for FY 2025-26. This estimate is based on several macroeconomic assumptions, including an exchange rate of Rs 290/USD, low hydrology, US inflation at 2%, KIBOR at 11%, and Pakistan's inflation at 8.65%. Nepra acknowledged that although CPPA-G initially based its forecast on an exchange rate of Rs 280/USD, the Federal Government's budgetary estimates and prevailing market conditions justify the use of Rs 290/USD. As the majority of power generation costs are dollar-indexed, exchange rate fluctuations have a direct impact on electricity prices. The Authority, in its determination observed that during hearing various stakeholders highlighted that exchange rate of Rs.280/USB may not be realistic and may result in positive periodic adjustments as the prevailing exchange rate is already higher. It was also highlighted by one of the commentators that Federal Government in budgetary estimates has considered exchange rate of Rs.290/USD. The Authority also noted that 3 month KIBOR as of June 2025 has remained lower as compared to the projections of CPPA-G and may reduce further going forward. In view thereof, the Authority directed CPPA-G to also submit a PPP forecast scenario, by taking into account exchange rate of Rs.290/USD and KIBOR @ 11%, with following other assumptions; CPPA-G in its Report has projected growth under two scenarios, ie, normal 2.8% and high 5%, however, actual demand during last two years either decreased or remained stagnant. For FY 2023-24, the overall generation is reduced by around 1.79% as compared to FY 2022-23 and for FY 2024-25 (May & June 2025 projected), total generation is expected to remain almost at the same level as of FY 2023-24. To analyse the projections made by CPPA-G, the actual generation data from July 2024 to April 2025 has been considered. The actual generation from the Grid remained at 100,660 GWhs, from July 2024 to April 2025, lower by 5.40% from the reference generation assumed in PPP projections for the FY 2024-25. This reduction of 5.40%, when applied to the projected generation for May and June 2025, results in total generation of around 125,930 GWHs from the Grid. After accounting for the increased supply to KE from national Grid in FY 2025-26, and by applying the growth rate of 2.8%, as proposed by CPPA-G in one of its growth scenarios, the projected generation works out as 132,247 GWh, which when adjusted with Transmission losses, results in demand of 128,544 GWhs at 132 KV. CPPA-G in its Report has also projected similar demand at 132 kV, however, reliance was placed on the anticipated shift of captive consumers to National grid and improved economic situation. The improved economic situation, although may lead to additional electricity consumption, however, keeping in view increasing penetration by DGs and past trends, the Authority considered demand growth of 5%, assumed by CPPA-G as ambitious, and unlikely to happen. Copyright Business Recorder, 2025
Business Recorder
24-06-2025
- Business
- Business Recorder
PD blocks Rs4.69/unit FCA relief
ISLAMABAD: In a surprise move, the Power Division on Monday blocked a proposed Rs 4.69 per unit relief in Fuel Charges Adjustment (FCA) for K-Electric (KE) consumers for April 2025, citing a new government policy aimed at uniform FCA application across all electricity consumers nationwide. The development came during a public hearing held by the National Electric Power Regulatory Authority (NEPRA), chaired by its Chairman Waseem Mukhtar. The hearing was convened to consider KE's request for provisional FCA relief for April 2025. During the proceedings, Additional Secretary (Power Finance) Mehfooz Bhatti—accompanied by CPPA-G representative Naveed Qaiser—requested NEPRA to defer the FCA determination until the federal government's review motion on KE's Multi-Year Tariff (MYT) determination is decided. However, Bhatti did not provide any supporting financial or technical data to justify the request. March FCA: KE seeks Rs5.02 interim negative adjustment The Power Division formally submitted a letter dated June 23, 2025 to NEPRA seeking the deferment, but the letter was not made public. 'We are under an IMF program, and consumers are being burdened,' Bhatti stated. A NEPRA official rebutted the claim, clarifying that FCA is a pass-through item, which does not impose a direct fiscal burden on the government—unlike the Quarterly Tariff Adjustment (QTA). Chairman NEPRA Waseem Mukhtar expressed strong reservations over the Power Division's approach, stating that such a move compromises regulatory transparency and public trust. He questioned whether the request came directly from the federal government or the Power Division. Bhatti clarified that it was the Power Division's initiative, and that formal cabinet approval was still pending. NEPRA Member Legal, Amina Ahmed, further challenged the justification of the deferment and inquired whether CPPA-G would continue subsidizing KE. Qaiser responded that an agreement exists between CPPA-G and KE for the subsidy. To this, Member Ahmed sarcastically noted, 'You also have agreements with others,' hinting at broader inconsistencies in policy enforcement. Chairman Mukhtar underscored that as a public hearing, the process must be transparent and not conducted 'in the dark.' He raised concerns about the long delay associated with the federal review motion, questioning if the FCA for KE would remain unresolved for as long as six months, and how such a substantial negative adjustment would be managed in the interim. Qaiser initially suggested that since a positive FCA of paisa 10 per unit was being charged to DISCO consumers for April, the same adjustment could be applied to KE customers. However, he immediately retracted the suggestion when the Chairman pointed out the contradiction in passing on positive adjustments while withholding negative ones. Qaiser also claimed that a new FCA mechanism summary had been sent by the Power Division to NEPRA. This was contradicted by NEPRA's Mubashar Bhatti, who clarified that NEPRA had only commented on an earlier summary, and no new document had been received. KE CEO Syed Moonis Abdullah Alvi said KE would comply with NEPRA's decision but voiced concern over the abrupt policy shift. 'In the past, KE consumers paid higher FCAs compared to the rest of the country. No one advocated uniformity then,' Alvi said. 'Now that FCA is lower for Karachi, withholding the relief is not only unfair but also undermines confidence in regulatory fairness,' he added. He emphasized that industries and consumers in Karachi were expecting the relief and deserved equal treatment. Following internal deliberations, Chairman Mukhtar announced that NEPRA would reschedule the hearing for next week to allow further examination of the issues raised. In its written communication, the Power Division referred to NEPRA's June 18, 2025 public notice announcing the June 23, 2025 hearing on KE's request for a provisional FCA for April 2025. KE had sought a negative FCA of Rs 4.69/kWh, amounting to Rs 7.173 billion in consumer relief. By contrast, consumers of state-run DISCOs were charged a positive FCA of Rs 0.9306/kWh for the same month, as per NEPRA's June 5, 2025 determination, notified via SRO 1046(I)/2025. The Power Division argued that this significant discrepancy stems from KE's higher reference fuel cost of Rs 15.9947/kWh—provisionally allowed under NEPRA's May 27, 2025 MYT determination covering FY 2023-24 to FY 2029-30. It pointed out that the reference was originally established during the January–March 2023 quarter of the previous MYT and has continued to be used despite the passage of two years. Highlighting the potential implications of this outdated reference, the Power Division stated that both it and CPPA-G have filed review motions to seek a re-determination of the FCA references under the applicable regulatory framework. Proceeding with the FCA decision based on these disputed provisional values, the Division warned, could lead to regulatory inconsistencies, retrospective adjustments, and unequal consumer treatment. 'This could contravene the principles of fairness, transparency, and due process laid out in the Regulation of Generation, Transmission and Distribution of Electric Power Act, 1997 and the NEPRA Tariff (Standards and Procedure) Rules, 1998,' the letter added. The Power Division urged NEPRA to defer KE's FCA decision for April 2025 until the motions are decided and new FCA reference values are formally adopted. The Division said the request was being made in the interest of regulatory consistency, consumer equity, and to prevent premature or potentially unjustified adjustments. NEPRA is now expected to revisit the matter in its next scheduled hearing. Copyright Business Recorder, 2025
