NEPRA reserves verdict on Rs2.56 per unit tariff hike request

The National Electric Power Regulatory Authority (NEPRA) has reserved its decision on a request by the Central Power Purchasing Agency (CPPA) to raise electricity tariffs by Rs2.56 per unit under September's fuel price adjustment mechanism, an increase that would place an estimated additional burden of Rs32.66 billion on consumers nationwide, including in Karachi.

CPPA sought the positive adjustment at a public hearing, arguing that the actual average fuel cost of generation in September was Rs10.02 per unit against a reference estimate of Rs7.46 per unit, and that it should be allowed to recover the gap from utility consumers.

According to the petition, total fuel expenditure on power generation in September came to Rs127.87 billion, while distribution companies sold 12.76 billion units. Imported fuel and thermal generation accounted for most of the cost: generation on imported coal cost Rs37.14 billion, LNG-based generation Rs31.93 billion, local gas Rs13.89 billion, diesel Rs13.26 billion and furnace oil Rs11.81 billion.

The Power Division told the regulator that the increase could have been considerably larger. Officials said preliminary estimates had put the September adjustment at between Rs5 and Rs6 per unit, and that two hours of what they described as systematic load management helped cap the proposed increase at Rs2.56 per unit. On that basis, government officials argued that administrative measures had limited the inflationary effect on consumers.

Industrial representatives at the hearing urged the energy authorities to reduce fuel levies in order to bring down production costs for export sectors. Consumer groups have said they are watching the proceedings for transparency in how fuel costs are calculated.

NEPRA's technical team is verifying the data presented before a formal written determination and notification are issued. The approved rate will be applied to upcoming billing cycles only after that notification, so commercial and domestic consumers will not know the final billing impact until the regulator publishes its decision. The Express Tribune also reported that NEPRA is to decide on the Rs2.56 increase.