Electricity prices may rise as hydropower output drops

Express Tribune

29-04-2025

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Consumers are likely to face higher electricity bills in May 2025 due to a drop in hydropower generation and increased reliance on expensive fuels to meet surging power demand.
Electricity generation costs are expected to rise under the Fuel Cost Adjustment (FCA) for April, mainly due to a 20% increase in power demand and reduced hydropower output. To bridge the demand-supply gap, the government turned to costlier thermal power plants, pushing up generation expenses, said the General Manager of the National Power Control Centre (NPCC) during a public hearing held by the National Electric Power Regulatory Authority (NEPRA).
The Central Power Purchasing Agency Guarantee Limited (CPPA-G) has submitted a request for a Rs0.0309/unit reduction in electricity tariff on account of FCA for April. However, NEPRA officials explained that, after adjusting for a larger negative FCA refund of Rs0.4641/unit paid in April, the net cost to consumers will effectively increase by Rs0.4332/unit in May.
When asked about the continued absence of the Neelum-Jhelum hydropower project from the national grid, NPCC officials confirmed it remains offline with no timeline for its return. They noted that if not for prior year adjustment claims by distribution companies (Discos), the March FCA would have been positive as well.
If approved, the minor FCA relief of Rs0.0309/unit for April would provide only Rs250 million in savings for consumers, NEPRA officials said.
Despite the rise in FCA, the NPCC General Manager assured that there will be no shortage in electricity generation in the coming months, citing adequate fuel arrangements. The increase in FCA, he said, is solely due to reliance on higher-cost fuel sources.
Backing NPCC's assessment, CPPA-G CEO Rihan Akhtar confirmed that costly fuel use will drive up FCA in the near term. During the hearing, participants also raised concerns about the long-term power generation strategy and the structure of FCA adjustments.
Amir Sheikh noted that captive power plants were forced to shift to the national grid, freeing up indigenous gas and RLNG supplies, especially in Sindh and Khyber-Pakhtunkhwa. However, he criticised the lack of transparency in how this diverted gas was utilised and stressed that the industry should benefit from it through increased Fuel Price Adjustment (FPA) refunds.
Quarterly adjustments
In a separate development, NEPRA conducted another public hearing on the quarterly adjustment for the third quarter of FY2024–25. Consumers are set to receive a relief of Rs1.50/unit for three months, if the adjustment is approved. CPPA-G informed the hearing that power distribution companies (DISCOs) had submitted a relief request amounting to Rs51.493 billion for this period.
NEPRA chairman chaired the session, which included participation from business leaders, journalists, and the general public. The authority expressed concern over the absence of senior officials from HESCO, MEPCO, and KESCO and decided to seek an explanation from the concerned Discos.
The final decision, applicable to all distribution companies including K-Electric, will be issued after detailed scrutiny. KE noted in a statement that the request pertains to the January–March 2025 period and includes charges related to system operations. XWDISCOS filed the request covering system operation charges. As per government rules, NEPRA's final decision—once notified—will apply to all distribution company customers, including KE. The charges and billing period will be specified in the notification.