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In response to criticism over payments to Independent Power Producers (IPPs) and ongoing protests by Jamaat-e-Islami, the National Electric Power Regulatory Authority (Nepra) has announced a substantial increase in electricity rates. Effective from August, consumers will see an additional charge of Rs2.5627 per unit on their electricity bills.
This rate adjustment, which affects all consumer categories except electric vehicle charging stations (EVCS) and lifeline consumers, will impose an extra financial burden of Rs33.45 billion on power consumers. With the addition of 18 percent GST, the total financial impact will escalate to approximately Rs39 billion.
The hike is attributed to the monthly fuel charges adjustment (FCA) for June 2024, which seeks to reconcile the disparity between the actual cost of power generation and previously charged rates. The increase is primarily driven by high prices of liquefied natural gas (LNG) and oil, combined with a decrease in electricity demand.
The adjustment follows a request from state-run power distribution companies (DISCOs) to charge an extra Rs2.63 per unit. DISCOs argued that the reference fuel cost for June was set at Rs7.14 per unit, while the actual cost turned out to be Rs9.77 per unit. This discrepancy led to the necessity for the rate adjustment.
During a public hearing on July 31, the Central Power Purchasing Agency (CPPA) CEO explained that there was a lower generation from hydro and local coal sources compared to the reference tariff assumptions. The Neelum-Jhelum Hydropower Project, which was expected to contribute, was not operational due to forced outages, affecting overall generation.
The CPPA reported that in June, 13,459 gigawatt-hours (GWh) of electricity were generated at a fuel cost of Rs119.7 billion (Rs8.89 per unit). Of this, 13,071 GWh were delivered to distribution companies at Rs127.7 billion (Rs9.77 per unit). Consumption dropped by 1.9 percent compared to June 2023, with the fuel cost adjustment (FCA) for June 2024 being 40 percent higher than the previous year’s Rs1.88 per unit.
The generation mix for June included 35 percent from hydropower, 18 percent from LNG, 14.85 percent from nuclear, 11 percent from local coal, and 8.66 percent from local gas. Imported coal contributed 4.74 percent. The cost of LNG-based generation increased to Rs26.32 per unit, while domestic gas costs rose slightly to Rs13.93 per unit. Local coal costs decreased to Rs11.1 per unit, and imported coal fell to Rs15.5 per unit. Renewable sources such as wind, bagasse, and solar contributed 5.14% of the grid’s supply, with bagasse generation costs remaining steady at Rs6 per unit.
