"In the light of discussion and after consideration of all relevant facts and circumstances of the case, the Authority is of view that the request of the petitioner cannot be accepted, therefore, the tariff petition filed by the petitioner is dismissed," the determination, a copy of which is available with Business Recorder, said.
KW&SB on February 28, 2012 had filed a tariff petition for determination of change in Karachi Electric Supply Company (KESC) rates for KWSB (from commercial or industrial to separate special tariff) under Rule 3(1) of Nepra Tariff Standards and Procedure Rules, 1998. A public hearing in this regard was also held on June 12, 2012 in Karachi.
Addressing the petitioner's request for reduction in its tariff, the Authority after due deliberation on the issue is of the opinion that petitioner's plea for reducing tariff to half is not backed with any justification or rationale.
"The Authority considers that the justification and rationale submitted by the petitioner with regard to reduction in electricity rates is not sufficient to decide the issue. In the opinion of the Authority, KW&SB can improve its revenue position through the following measures. 1. The gap between revenue collection and billing should be reduced. 2. Stoppage of theft, leakage of water. 3. Improvement in efficiency and cost reduction," the judgment said.
According to the determination, the Authority observed that it had approved a multi-year tariff for KESC on December 23, 2009 having applicability for seven years, ie till June, 2016 wherein revenue requirement of the company from each category of tariff was fixed by the Authority. The interveners and other commentators while offering their comments in the hearing of the petition have suggested that the burden of reduced tariff should not be passed on to the other consumers. KESC in its comments has also submitted that KWSB's request for reduction in tariff may be accepted if KESC's revenue requirement is ensured by the Authority.
The Authority noted that at present KW&SB was already being charged by KESC at subsidised rates on the basis of applicable tariff under Schedule-II notified by GoP from time to time, whereas the differential between the Nepra approved tariff and GoP approved tariff was borne by the federal government as tariff differential subsidy for all category of consumers including KW&SB.
The Authority considers that KESC and KW&SB are two separate legal entities having their own tariffs to recover their respective operating cost for provision of essential utility services to the consumers of Karachi. In the opinion of the Authority the petitioner has not been able to justify its request for the proposed reduction in electricity rates either in its petition or through subsequent communications to the Authority.
In view of the Authority it would be unfair to accept the petitioner's request merely on the ground that it cannot increase water charges due to socio-economic reasons to match its costs with revenues, despite the fact that the petitioner can adopt other measures to meet cost & revenue gap by following proper procedure as per its applicable law.
Further, the Authority does not find any justification for shifting shortfall in revenue of KESC on account of proposed reduction in electricity rates for KE&WB to other categories and consumers of KESC in order to ensure revenue requirement of KESC. Nepra considers that KW&SB under its Act can seek increase in water charges to meet its prudent costs or if necessary, the provincial government may provide additional funds from its own sources to meet KW&SB's budgetary requirements. Further, it may seek exemption of taxes and electricity duty from its monthly electricity bills at the right forum from the federal/provincial governments as the case may be.
The Authority therefore holds that the reduction in electricity rates on account of inability of KW&SB to meet its cost of service at the existing water charges as proposed by the petitioner is not justified and therefore not accepted. Beside the dismissal of petition of KW&SB, Nepra, however, has considered the request of KWSB and the submission of the interveners in relation thereto and has observed that the functions and activities being performed by KWSB does not strictly fit into the definition of industrial and commercial consumers given in the Authority's approved terms and conditions of tariff for supply of electric power to consumers of KESC.
The Authority, however, observed that under the Bulk Supply Category (Category C) in the existing Schedule of Tariff, there is a provision that the consumers who have mixed load (at different voltage level) and who do not fall under any other category of consumers can be charged under this category.
Nonetheless, the Authority is of the opinion that charging water and sewerage utilities under industrial or commercial categories is not a correct exercise as these utilities are non-profit government agencies with prime objective of providing essential service of drinking water and sewerage.
The Authority further considers that there is no uniformity in application of electricity rates and tariff categories being charged by the distribution companies for the civic agencies all across the country. Therefore, in order to bring in clarity and uniformity in the tariff to be charged by distribution companies and KESC to civic agencies as well as KW&SB, the Authority concurs with the petitioner and opinion of some interveners that there is a need for application of tariff on uniform basis all across the country including the petitioner and if required a separate category in the existing schedule of tariff may be introduced specifically for the government owned civic agencies.
The Authority has therefore decided that the issue of ,whether or not, a separate category of tariff for KW&SB and other such civic agencies is required in the existing approved schedule of tariff may be decided separately after consultation with all the distribution companies including KESC. For this purpose, after consultation process and detailed deliberations, the Authority may initiate suo moto proceedings under Rule 3(1) of the Nepra Tariff (Standards and Procedure) Rules 1998 for prescribing a separate category of tariff for the civic agencies including KW&SB.