NEPRA turns down K-Electric's 1.5% retail margin proposal

May 27, 2025 (MLN): The National Electric Power Regulatory Authority (NEPRA) declined K-Electric Limited (PSX: KEL’s) proposed 1.5% retail margin, arguing that the utility already earns returns on its Regulatory Asset Base (RAB).

The move prevents KEL from extracting additional earnings from its supply function beyond established recovery mechanisms.

NEPRA also turned down KEL’s request to recover unrecovered costs from the previous MYT (2017-23), effectively capping financial adjustments for past losses.

The regulator maintained that any retrospective claims should have been accounted for within the prior tariff framework, as per the press release issued today.

Further, KEL’s proposal to index Operations and Maintenance (O&M) costs based on growth in billed units was rejected.

NEPRA insisted that tariff adjustments must incorporate efficiency targets, avoiding unnecessary cost escalations.

The regulator also refused KEL’s request to pass through stamp duty and taxes on fuel purchases, reinforcing the principle that such expenditures should be managed internally.

Additionally, KEL sought to revise its late payment surcharge (LPS) mechanism, linking penalties to KIBOR rates rather than the fixed 10% charge. NEPRA rejected the plan, maintaining the existing structure for overdue payments.

The tariff determination, covering KEL’s financial framework for FY 2023-24 to FY 2029-30, has been forwarded to the federal government for gazette notification.

If authorities fail to act within 30 days, NEPRA will publish the decision independently under Section 31(7) of the NEPRA Act, the notification stated.

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