Consumer representatives have protested against a proposed Rs34 billion additional power tariff burden arising from higher capacity charges, lower electricity sales, loadshedding and increasing solar penetration. The proposed adjustment could raise electricity tariffs by around Rs1.35 per unit for three months, prompting industrial consumers to demand an immediate review of the government’s incremental tariff package.
The issue was raised during a public hearing conducted by the National Electric Power Regulatory Authority (Nepra) on Wednesday to examine quarterly tariff adjustments (QTA) sought by power distribution companies (Discos).
Industrial consumers argued that the proposed adjustments could effectively place an additional burden of around Rs2 per unit on consumers, further increasing electricity costs for businesses and households already facing high energy prices.
Discos Seek Higher Quarterly Tariff Adjustments
During the hearing, several distribution companies reported declining electricity sales. Most major Discos recorded around a 5% decline in electricity sales, raising concerns among Nepra officials about the reasons behind the reduction.
Nepra Member Maqsood Anwar Khan questioned whether excessive loadshedding was contributing to the decline, particularly in areas where consumers have relatively low losses and strong payment records.
He specifically asked whether power outages were also occurring in areas populated by consumers who regularly pay their electricity bills.
Representatives of Faisalabad Electric Supply Company (Fesco) confirmed that loadshedding was taking place even in low-loss areas with high-paying consumers.
The development raised concerns about the relationship between lower electricity sales and increasing capacity payments. When electricity consumption declines while fixed capacity-related costs remain payable, the cost burden can increase on the units sold to consumers.
Islamabad Electric Supply Company (Iesco), meanwhile, sought an increase of around Rs1.83 per unit in its quarterly tariff for the September-November period, primarily due to higher capacity charges.
Hazara Electric also requested an additional QTA of around Rs1.65 per unit.
Nepra Questions Impact of Industrial Tariff Package
The hearing also focused on the government’s incremental tariff package for industrial consumers.
Under the package, industrial consumers are supplied electricity at around Rs22.98 per unit, compared with an average tariff of approximately Rs40 per unit.
Maqsood Anwar Khan said he had raised concerns about the sustainability of the package since its introduction.
He questioned whether the reduced industrial tariff could create additional financial pressure elsewhere in the power sector, particularly as distribution companies face declining sales and rising capacity-related costs.
However, Khan also challenged the argument that increasing solar penetration was damaging the power sector.
He said solar generation was helping reduce system losses and lowering the need for expensive imported fuel. According to him, without the contribution of solar power, the country could have faced greater loadshedding during the recent regional conflict or higher tariff adjustments because of increased fuel costs.
Industrial Consumers Demand Review
Nepra Member Amina Ahmed said the higher QTA impact arising from electricity consumption during the April-June period had become unavoidable.
However, she said the situation made an urgent review of the incremental industrial tariff package necessary.
The Power Division’s tariff team also confirmed that a review case had already been submitted to Nepra.
Naveed Qaiser, head of the Power Division’s tariff team, rejected the suggestion that the industrial tariff package had damaged the power sector. He maintained that industrial electricity consumption had generally improved.
Industrial representatives, however, challenged this assessment.
Representatives from the Karachi Chamber of Commerce, Korangi Association of Trade and Industry and other business groups argued that the improvement in grid-based industrial electricity consumption was largely linked to the shift of industries away from captive power generation.
They attributed the shift to the government’s decision to impose a punitive levy on captive natural gas consumption under measures associated with the International Monetary Fund programme.
According to industrial representatives, this policy encouraged industries to move towards grid electricity rather than demonstrating a broad-based recovery in industrial power demand.
Additional Rs14bn Demand Under Review
The Power Division also clarified the composition of the additional tariff claims submitted by distribution companies.
Qaiser said power companies had initially sought around Rs23 billion in additional quarterly tariff adjustments.
Another Rs14 billion was subsequently sought by Sukkur Electric Power Company (Sepco) on account of bilateral electricity trading involving new captive power plants at Naudero, Dawood and Shikarpur.
However, the Power Division official said the actual additional impact over the quarter was expected to be around Rs17 billion to Rs18 billion.
Nepra Member Amina Ahmed indicated that the Rs14 billion claimed by Sepco might not ultimately form part of the quarterly tariff adjustment.
She said the amount would need to be examined separately before any decision was taken.
Higher Capacity Charges Raise Consumer Concerns
The proposed adjustment highlights the continuing challenge faced by Pakistan’s power sector as electricity sales decline while fixed capacity-related obligations remain high.
Consumer representatives fear that passing these costs on to electricity users could further increase the cost of doing business and put additional pressure on household budgets.
Industrial consumers have already been facing high electricity tariffs, rising production costs and increased competition in domestic and international markets.
The latest hearing also brought the relationship between solar adoption, loadshedding and power-sector finances into sharper focus.
With more consumers installing rooftop solar systems, grid electricity demand has declined in certain periods. At the same time, distribution companies continue to face fixed capacity payments and other sectoral costs.
Nepra is now expected to examine the QTA claims, the proposed incremental tariff package and the separate Sepco demand before determining the final adjustment.
The regulator’s decision will determine how much of the proposed burden is ultimately passed on to consumers during the September-November period.