Kot Addu Power Company (Kapco) has formally submitted an application to the National Electric Power Regulatory Authority (Nepra) for the approval of an unprecedented electricity tariff. If granted, this tariff will become the most expensive in the country’s history, setting a new benchmark for energy costs.
The Proposed Tariff: Kapco has requested Nepra’s consent to charge a staggering tariff of Rs77.31 per unit of electricity from its consumers. This stands in stark contrast to the current rate of Rs28.80 per unit, highlighting the substantial increase the power company is seeking.
Nepra’s Decision Meeting: Nepra has scheduled a crucial meeting to deliberate on Kapco’s tariff request, and it will take place on October 3 at 2 pm. Notably, this meeting will be conducted virtually via Zoom, allowing all stakeholders, interested parties, affected individuals, and the general public to participate and witness the proceedings.
17 Questions from Nepra: As part of the process, Nepra has issued a notice for the hearing, in which it posed 17 critical questions to Kapco regarding the proposed tariff. These questions are expected to shed light on the rationale and implications behind the substantial tariff hike.
Understanding Capacity Payments: A significant portion of Kapco’s proposed tariff increase includes capacity payments, amounting to up to PKR 5.37 per unit. Capacity payments are compensation made by users of an energy asset to its owner in exchange for the right to utilize the asset’s capacity. This mechanism is commonly employed in the electric and natural gas industries, particularly for power plants and pipelines.
Kapco’s Background: Kot Addu Power Company, established in accordance with the Power Policy of 1996, has a capacity of 1345 megawatts. While the company’s license expired in 2021, it received an extension. Under Pakistani law, power companies are typically required to cease operations upon the expiration of their licenses.
Diverse Energy Generation: Kapco’s electricity generation is diverse, encompassing sources such as gas, furnace oil, diesel, and liquefied natural gas (LNG). This variety in energy sources has allowed the company to contribute significantly to Pakistan’s power supply.
As the October 3 meeting approaches, stakeholders, consumers, and the public at large will be closely monitoring Nepra’s decision, which will have far-reaching consequences for electricity costs and the energy landscape in Pakistan.
