NEPRA Hikes Electricity Rate by Rs. 2.56 Per Unit

The National Electric Power Regulatory Authority (NEPRA) has approved an increase in electricity rates by up to Rs. 2.56 per unit in terms of fuel charges adjustment (FCA), due for collection in August bills. This hike will impose an additional financial burden of Rs. 33.45 billion on power consumers. This burden may rise to Rs. 39 billion after accounting for the 18 percent general sales tax (GST). The adjustment stems from the gap between the actual cost of power generation and what was previously charged. The rise in generation costs was primarily due to higher prices for liquefied natural gas (LNG) and oil, along with a decrease in electricity demand. The increase will affect all consumer categories except electric vehicle charging stations and lifeline consumers. The state-run power distribution companies (DISCOs) had initially sought permission to charge an additional Rs. 2.63 per unit, citing a higher-than-expected fuel cost of Rs. 9.77 per unit compared to the reference cost of Rs. 7.14 per unit. During a public hearing on July 31, the Central Power Purchasing Agency (CPPA) highlighted that lower-than-expected generation from hydro and local coal sources, coupled with the outage of the Neelum-Jhelum Hydropower Project, contributed to the increased costs. Additionally, fuels like RLNG, which were not a significant part of the reference mix, had to be utilized due to system requirements, leading to a 10 percent shortfall in actual generation. In June, the country generated 13,459 gigawatt-hours (GWh) of electricity at a fuel cost of Rs119.7 billion, translating to Rs. 8.89 per unit. Of this, 13,071 GWh were delivered to DISCOs for Rs. 127.7 billion (Rs. 9.77 per unit). The fuel cost adjustment for June 2024, at Rs. 2.63 per unit, marks a 40 percent increase compared to last year’s Rs. 1.88 per unit.