Nepra rejects govt plea to apply revised SoT to KE

Business Recorder

02-07-2025

ISLAMABAD: National Electric Power Regulatory Authority (Nepra) has turned down the federal government's plea to apply a revised uniform Schedule of Tariff (SoT) to K-Electric (KE), based on the previously determined tariff for the January–March 2023 quarter— a move likely to frustrate the Power Division.
Nepra's decision was revealed in a determination issued on Tuesday, which outlines a revised average uniform SoT of Rs 31.59/kWh for both power Distribution Companies (Discos) and K-Electric for the fiscal year 2025–26. This rate marks a reduction from the earlier Rs 32.73/kWh (excluding duties and taxes), reflecting an average decrease of Rs 1.14/kWh after factoring in a budgeted Tariff Differential Subsidy (TDS) of Rs 250 billion for FY 2025–26.
In its formal request (Motion for Leave), the Power Division argued that under government policy, a uniform consumer-end tariff should be maintained across K-Electric and state-owned Discos— even post-privatisation— through a mix of direct and indirect subsidies. To achieve this, the KE tariff should be modified to align with Nepra's approved national uniform tariff structure, incorporating the proposed targeted and cross subsidies.
DISCOs and KE: Nepra approves revised average uniform SoT
The Power Division also referenced legal provisions— Section 7, 31(4), and 31(7) of the NEPRA Act and Rule 17 of the relevant rules— supporting its appeal for revised consumer-end tariff recommendations for K-Electric, to be effective from July 1, 2025. The motion included a request to update the SoT via an amendment to SRO No. 575(1)/ 2019.
During the hearing, K-Electric's Director of Finance Ayaz Jaffer urged Nepra to use KE's most recent tariff (determined on May 27, 2025) instead of the older Jan–Mar 2023 rates to establish the uniform tariff. However, Naveed Qaiser of the Power Planning and Monitoring Company (PPMC) opposed the suggestion, pointing out that the federal government has already filed a review petition against the newer KE tariff determination. Therefore, he argued, the Jan–Mar 2023 tariff should be treated as the valid benchmark.
The Authority said it understands that it determines revenue requirement/ tariff for Discos for each year. Ultimately, Nepra decided not to accommodate the Power Division's request. In its official determination, the regulator stated that despite the federal government's plea to use the Jan–Mar 2023 KE tariff as the basis for a uniform SoT, it opted to apply the rates from KE's latest approved tariff for FY 2023–24, as issued on May 27, 2025.
Nepra announced a reduction in the uniform average tariff from Rs 35.50/kWh to Rs 34/kWh, indicating an overall decrease of Rs 1.50 per unit.
The revised SoT for consumers will be as follows: (i) up to 50 units– lifeline (Rs 3.95/kWh;(ii) 51-100 units- lifeline Rs 7.74/kWh;(iii) 0-100 (protected) Rs 10.51/kWh;(iv) 101-200 (protected)Rs 13.01 /kWh; (v) 01-100(non-protected) Rs 22.44/kWh; (vi) 101-200(non-protected) Rs 28.91/kWh;(vii) 201-300(non-protected Rs 33.10/ kWh; and (viii) 300 & ToU (non-protected) Rs 41.78/kWh. Average uniform domestic tariff will be Rs 27.20/kWh with reduction of Rs 1.13/Kwh from 28.33/kWh.
New commercial tariff has been fixed at Rs 45.43 per unit with a reduction of Rs 1.15/Kwh, general services, Rs 43.17/kWh, industrial Rs 33.48/kWh, Bulk Rs 41.76/kWh, agricultural Rs 30.75/kWh, others Rs 32.68/kWh.
According to Nepra, total number of electricity consumers is 37,994,210 who are projected to consume 103,558/MkWh. The average tariff has been reduced to Rs 31.59/kWh for FY 2025-26 from Rs 32.73/kWh through re-basing.
Power Division explained that capacity charges have been reduced by Rs.186 billion, despite additional impact of Rs.50 billion capacity charges of Jamshoro Coal Plant, as compared to the reference capacity charges for the FY 2024-25. This reduction is mainly on account of termination/ re-negotiations of IPP contracts and change in exchange rate assumption.
The Authority also observed that the petitioner in its Motion and also during the hearing submitted that inter-disco tariff rationalisation is not aimed at raising any revenues for the federal government as it is within the determined consolidated revenue requirement of all the Discos for the FY 2025-26; rather the federal government would be providing a subsidy of Rs.249 billion to different consumer categories during the period.
The Uniform Tariff so determined by the Authority includes impact of PYA of Rs.58.68 billion, to be passed on in a period of twelve months from the date of notification of the decision.
It was further stated that there is no anomaly in the current industrial tariff structure as the total cost of B4— inclusive of both fixed and variable charges—is actually lower than B3, which is again lower than B2. This reflects the benefit of losses for consumers connected at high tension (HT) lines, as opposed to industrial consumers on low tension (LT) lines.
It was explained that ToU (Time-of-Use) pricing plays a critical role in maintaining power system stability and economic efficiency. Peak hours are strategically designated to curb demand during periods of high system stress when marginal generation costs are at their highest. However, lowering the peak rate would necessitate an upward adjustment of the off-peak rate to meet the system's annual revenue requirement. This could disproportionately burden smaller industrial consumers and potentially reduce overall electricity sales, thereby exacerbating the revenue shortfall and contributing to further upward pressure on tariffs.
Copyright Business Recorder, 2025