Power consumers to get Rs1.75 per unit relief over next 3 months

ISLAMABAD: Electricity consumers across the country are expected to receive an unusual relief of Rs1.75 per unit over the next three months (June to August), due to Rs64 billion in savings mainly on account of lower capacity charges paid to power producers during the first quarter (January–March 2026) of the current year, it emerged on Wednesday.

Under the annual tariff rebasing mechanism, the government revised tariff-setting to a calendar-year basis, with effect from January 1, 2026, from the historic practice of fiscal-year adjustments.

The National Electric Power Regulatory Authority (Nepra) has called a public hearing on May 19 at the request of former Wapda distribution companies (Discos), which have sought a Rs63.94 billion refund to consumers under the quarterly tariff adjustment (QTA) mechanism. The refund is estimated to result in a negative QTA of about Rs1.75 per unit for three billing months.

Consumers are currently paying about 42 paisa per unit in positive QTA on account of higher costs of Rs10.8 billion for the fourth quarter (October–December 2025), which expires by the end of next month. This will be replaced by a negative QTA for the following three months, resulting in a net reduction of about Rs2.15 per unit. This impact may be partially diluted by higher monthly fuel cost adjustments due to expensive fuel imports.

It may be noted that consumers are currently paying about 42 paisa per unit positive QTA on account of higher costs (Rs10.8bn) for the fourth quarter (Oct-Dec 2025) that expires by the end of next month. That would be replaced by a negative QTA for the following three months, resulting in a net reduction of about Rs2.15 per unit. This may be diluted partially in the case of higher monthly fuel cost adjustments because of expensive fuel imports.

The Discos sought adjustments on account of capacity charges, transmission charges and market operator fee; the impact of the incremental consumption package announced by the government for industrial and agricultural consumers for three years; and the impact of transmission and distribution losses on monthly fuel costs, as well as variable operations and maintenance charges for the first quarter of the calendar year, i.e., January–March 2026.

The total negative impact of capacity charges comes to about Rs37bn for the said quarter. However, this is partly offset by Rs4.876bn in higher operations and maintenance costs and Rs2.8bn on account of system losses’ impact on monthly fuel cost adjustments (FCAs). Savings have also accrued from the service charge and market operator fee (Rs11.24bn) and the Rs23.5bn impact of the incremental package, bringing net savings for consumers to Rs63.94bn.

All 11 Discos have sought a negative QTA charge for the first quarter. The Faisalabad Electric Supply Company leads in savings with Rs10.45bn, followed by Hyderabad Electric Supply Company with Rs10.14bn, Peshawar Electric Supply Company with Rs8.63bn, and the Lahore Electric Supply Company with Rs7.9bn.

Islamabad and Multan Electric Supply Companies have sought refunds of Rs6.37bn and Rs6.33bn, respectively, followed by Gujranwala Electric Supply Company with Rs5.1bn and Tribal Electric Supply Company with Rs3bn. Sukkur and Quetta Electric Supply Companies have proposed refunds of Rs2.9bn and Rs2.6bn, while Hazara Electric Supply Company has called for a refund of Rs495m to consumers.

Once approved, the QTA will also apply to all Discos and K-Electric. However, QTAs, the Debt Service Surcharge (DSS) and negative FCAs do not apply to eligible consumers under the special tariff package announced by the government on incremental consumption.

Under the tariff mechanism, changes in fuel cost are passed on to consumers monthly through an automatic mechanism, while quarterly tariff adjustments—on account of variations in power purchase price, capacity charges, variable operation and maintenance costs, and use of system charges, as well as the impact of transmission and distribution losses—are built into the base tariff by the federal government.