The government has increased the price of electricity for Karachi by up to Rs2.89, effective September 2020.
The federal ministry of energy issued a notification approving the increase in the K-Electric tariff, approved by the National Electric Power Regulatory Authority (NEPRA). The price has gone up because of adjustments from July 2016 to March 2019.
With the increase, K-Electric’s tariff became similar to that of other power companies in the country.
For those who use 301 units to 700 units, the price of one unit has increased by Rs1.65 to bring it to Rs19.25. People using more than 700 units will be paying Rs1.65 more. The new rate for these consumers has reached Rs22.35. Those who use 300 or fewer units have been exempted from the hike.
The tariff for 5kW commercial consumers has been increased Rs1.9 per unit. Industrial consumers will pay Rs2.89 more and agricultural consumers Rs2.58. For details read K-Electric tariff details here.
The price has been increased after taking quarterly adjustments into account.
What is quarterly tariff adjustment?
This adjustment is made on account of variations in power purchase price, inflation, operation and maintenance costs, rupee devaluation, transmission and distribution losses, write-offs and increased fuel costs over a month or a quarter. Unlike the Fuel Charges Adjustment, which is fully paid by customers, the quarterly adjustment amount is usually settled at the government level.
It is up to the government to decide whether it absorbs all of it or passes some of the increase on to consumers. So, when you read reports that the government is planning to give relief to electricity consumers, it indicates they are planning to absorb this increase.
The adjustments were delayed because the government didn’t finalise KE’s multi-year tariff.
The tariff or price of electricity includes charges for fuel (think furnace oil) used in electricity generation. The price taken at the time of billing varies over the course of the month because of changes in international oil prices.
Since the government didn’t finalise KE’s multi-year tariff until May 2019, the company could not calculate the quarterly adjustment nor charge consumers for this amount between July 2016 and June 2019. Even after the tariff was revised, the quarterly adjustment was not implemented. This is because the government was delaying the notification, which finally came out on October 12.