Nepra reserves decision on 19paisa per unit hike under August FCA

ISLAMABAD: The National Electric Power Regulatory Authority (NEPRA) on Monday concluded a public hearing on a petition seeking a 19-paisa per unit increase in electricity tariffs  under the monthly Fuel Cost Adjustment (FCA) mechanism, a move that could result in an additional financial burden of Rs2.62 billion on power consumers across the country.

During the hearing, officials informed NEPRA that distribution companies (Discos) were supplied 13.71 billion units of electricity in August at an average cost of Rs7.50 per unit, compared to a reference cost of Rs7.31 per unit. The proposed adjustment, if approved, will also be applicable to K-Electric (KE) consumers.

Industrial consumers strongly opposed the hike, expressing serious concerns over rising energy costs. They highlighted that the end of the prime minister’s relief package has already driven industrial power tariffs up by 10 percent, with the per-unit rate for industries jumping from Rs29 to Rs35.

“The government had earlier promised us electricity at nine cents per unit, but the current rates are severely hurting our competitiveness,” representatives of the industrial sector told NEPRA.

NEPRA officials stated that they would examine the data thoroughly before issuing a formal notification. If approved, the FCA increase will push electricity bills higher for households and businesses in the coming billing cycles, further straining inflation-weary consumers.

The FCA mechanism is designed to pass on fluctuations in global fuel prices directly to consumers through monthly adjustments, a practice that often fuels inflationary pressures in the broader economy.

According to data presented by the Central Power Purchasing Agency-Guarantee (CPPA-G), total power generation in August stood at 14,218 gigawatt hours (GWh) at a total cost of Rs103.4 billion, translating to an average of Rs7.27 per unit. After accounting for transmission losses, independent power producers (IPP) sales, and prior adjustments, the net supply to Discos was 13,715 GWh at Rs7.51 per unit, which led to the proposed Rs0.1911 per unit adjustment.

Hydropower remained the single largest contributor to the energy mix, generating 5,517 GWh — nearly 39 percent of total production — at zero fuel cost. Nuclear power plants followed with 2,145 GWh (15 percent) at a low rate of Rs2.19 per unit.

However, expensive RLNG-based generation accounted for 2,180 GWh (15.3 percent) at Rs21.73 per unit, while coal-based plants contributed 18 percent, with local coal costing Rs12.01 per unit and imported coal Rs14.07 per unit.

Generation from indigenous gas made up 7.3 percent of the mix at Rs13.43 per unit, whereas residual fuel oil (RFO) contributed less than 1 percent, but at a steep cost of Rs33.01 per unit. Meanwhile, electricity imports from Iran, though limited to 78 GWh, carried the highest cost of Rs41.09 per unit.

If the tariff hike is approved, consumers are likely to face higher electricity bills in the upcoming months, adding to the challenges of an already inflation-hit economy.