ISLAMABAD: The power regulator has calculated a reduction of Rs1.172 per unit (kWh) decrease in electricity rates for K-Electric consumers as per its profit retrieving procedure.
According to a unanimous decision of the four-member National Electric Power Regulatory Authority (Nepra), a reduction in consumer class-wise tariff except for lifeline consumers because of the clawback of profits for FY 2014-15 has been approved.
The multi-year tariff (MYT) of K-Electric approved by Nepra pledged a performance-based tariff which provided healthy efficiency gains to the private investor and formulated a clawback mechanism.
As per this method, when the annual return on regulatory assets base (RAB) surpassed 12 percent, the excess was to be allocated to consumers via a decrease in tariff.
And the profit retrieving mechanism required 25 percent of profit value surpassing 12 percent on assets and not crossing 15 percent be provided to consumers and 50 percent if annual return fell between 15 percent and 18 percent and 75 percent provided profit surpassed 18 percent.
Previously, Nepra had directed K-Electric to share the ascertained amounts with consumers, however, the company went onto file civil suits against this determination and enforcement of profit retrieval mechanism was cancelled by the Sindh High Court to the degree of quarterly adjustments.
The power regulator in its newest calculation shared K-Electric was bound to recommend modification of tariff to transfer of profits founded on an asset base of Rs27.5 billion for FY 2014-15 but failed to submit the request for adjustment.
Also, Nepra ordered K-Electric to submit a report detailing workings if the profit for the aforementioned year was eligible for clawback benefit to consumers or not.
However, K-Electric told Nepra its annual return was determined at 6.62 percent below the threshold of 12 percent, hence it wasn’t applicable.
