Electricity Tariff to Increase in January 2025 Despite Low Fuel Costs

Electricity tariffs for January 2025 will rise by Rs. 0.51 per unit compared to December 2024. This comes as the federal government is working on the early rebasing of the national tariff regime and adjusting peak and off-peak timings. It is noteworthy that fuel costs for power generation have remained below expected rates. Electricity was cheaper to make compared to the peak summer season. Central Power Purchasing Agency (CPPA) has proposed a negative fuel cost adjustment (FCA) of Rs. 0.63 per unit for November consumption, replacing the Rs. 1.14 per unit negative FCA applied in December. Due to this, the tariff will increase to Rs. 0.51 per unit for January. During a hearing chaired by NEPRA Chairman Waseem Mukhtar, inefficiencies within power companies were criticized, including an eight-month delay in Lahore-North grid projects and underutilization of the Matiari-Lahore Transmission Line; such issues force consumers to pay full charges for unused capacity. The CPPA reported Rs. 47 billion in partial load adjustment charges (PLAC) in 2023 which rose to Rs. 56 billion in 2024, due to unaffordable tariffs and increased solar adoption. NEPRA has ordered a technical study to examine changing demand patterns and an inquiry into transmission project delays.