Rs53 Billion Refund for Electricity Consumers on the Cards

The government is preparing to issue electricity refunds for consumers amounting to Rs53.4 billion across the country, including for K-Electric customers. The adjustment is part of the fourth quarterly tariff review (April–June) for the fiscal year 2024–25.

The Central Power Purchasing Agency-Guarantee (CPPA-G) has submitted a petition to the National Electric Power Regulatory Authority (Nepra), requesting a downward adjustment. Nepra will conduct a public hearing on August 4. The CPPA-G cited lower capacity payments following revised deals with public and private power producers as the main reason for the proposed reduction.

Faisalabad Electric Supply Company tops the list with a proposed refund of Rs15.579 billion. Lahore Electric Supply Company and Multan Electric Power Company follow with Rs12.758 billion and Rs8.467 billion, respectively. Other distribution companies offering electricity refunds for consumers include Gujranwala (Rs6.132 billion), Hyderabad (Rs6.818 billion), Islamabad (Rs1.04 billion), Peshawar (Rs2.7 billion), Sukkur (Rs504 million), and the Tribal Areas Electric Supply Company (Rs2.985 billion).

In contrast, Quetta Electric Supply Company is seeking to recover Rs3.594 billion from its customers rather than provide relief.

The CPPA-G petition also breaks down costs, including Rs182 million for variable operation and maintenance, Rs804 million for system usage and market operator fees, and a negative Rs662 million impact from incremental units.

Nepra has confirmed that once approved, the relief will apply to all consumers under the federal government’s uniform tariff policy. This includes K-Electric customers, who recently saw a new multi-year tariff notification by Nepra despite federal objections.

Nepra Notifies K-Electric Tariff Hike Despite Government Objections

Earlier this month, Nepra exercised its 2021 legal powers to directly notify K-Electric’s tariffs for supply, transmission, and distribution through 2030. The notification included a Rs6.15 per unit increase in the base tariff for K-Electric users. However, subsidies will be provided to maintain a consistent national tariff.

Nepra justified the move by stating there was no legal restriction in place and highlighted international pressure, particularly from the IMF and World Bank, to depoliticize tariff-setting and push forward energy sector reforms.

Still, the regulator warned that unresolved issues could weaken K-Electric’s financial standing, potentially disrupting electricity supply and affecting the broader energy sector.

For 2023–24, Nepra set K-Electric’s average power tariff at Rs39.97/kWh. This figure includes Rs31.96 for power purchase, Rs2.86 for transmission, Rs3.31 for distribution, and Rs2.28 as supply margin. A prior year adjustment of minus Rs 0.44/kWh has also been factored in.

K-Electric’s total revenue requirement is estimated at Rs606.9 billion, with Rs34.7 billion allocated for the supply margin and Rs36.2 billion for recovery loss coverage.