ISLAMABAD: The Power Division is set to submit a tariff petition to increase electricity rates, effective January 1, 2025. This move follows the federal government’s decision, after receiving approval from the International Monetary Fund (IMF) to shift the timing of tariff rebasing for consumers from the summer month of July to the winter month of January. This change is intended to minimize consumer backlash over tariff increases.
The Power Division briefed the Economic Coordination Committee (ECC) on the matter, stating that under Section 31 of the Regulation of Generation, Transmission, and Distribution of Electric Power Act, 1997, and Rule 17 of the NEPRA (Tariff Standards and Procedure) Rules, 1998, the National Electric Power Regulatory Authority (NEPRA) is responsible for determining consumer-end tariffs for Distribution Companies (Discos) and K-Electric. The most recent uniform tariff was notified by the federal government on July 14, 2024.
According to the NEPRA (Tariff Standards and Procedure) Rules, 1998, and Part 5 of the NEPRA Determination of Consumer-End Tariff (Methodology & Process) Guidelines, 2015, Discos are required to initiate the tariff determination process by submitting their minimum filing requirements by January 31 each year.
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This process involves internal meetings, public hearings, tariff determination, and government notification. Historically, tariff rebasing has been announced in July, with new rates taking effect on July 1.
However, this timing has led to a situation where consumers face both high Fuel Charges Adjustments (FCAs) and the annual tariff rebasing simultaneously during the summer months. This, combined with higher consumption in summer, results in significant increases in electricity bills, causing public dissatisfaction and nationwide protests.
Shifting the timing of the annual tariff rebasing to winter, when electricity consumption is lower, could help alleviate this issue. Any tariff increase would be more easily absorbed by consumers’ bills during this period. This shift could also contribute to more stable and sustainable electricity prices throughout the year.
The National Electricity Plan’s Strategic Directive Eight (8) calls for a review of the “Guidelines for Determination of Consumer-End Tariff (Methodology and Process), 2015,” to align the schedule of regulatory proceedings with planning activities and tariff determinations.
The Power Division submitted the following proposals for the ECC’s consideration and approval: (i) policy guidelines should be issued to NEPRA to revise the annual tariff determination process and amend the relevant legal and regulatory framework, so that the rebasing is notified with effect from January 1, 2025, each year, after the completion of all regulatory proceedings; and (ii) Power Division should be authorized to approach NEPRA to implement these policy guidelines.
During the ensuing discussion, the Power Division explained that NEPRA’s annual rebasing usually takes effect on July 1, during the summer. Given the hardships faced by consumers due to increased consumption in the summer months, it was recommended that the rebasing be shifted to January 1 (winter) each year. This shift would make it easier for consumers to absorb any tariff increases.
NEPRA supported the proposal in principle, and the Power Ministry indicated it would work closely with the regulator to implement the change. The forum also noted that NEPRA’s position aligned with the National Electricity Plan’s Strategic Directive 8, which aims to improve the Consumer-End Tariff Methodology and Process.
The ECC also discussed the potential implications of the proposed revision in light of ongoing negotiations with the IMF. The Finance Division informed the forum that the issue had been informally raised with the IMF during recent Extended Fund Facility (EFF) talks. Sources added that the ECC directed the Power Division to formally inform the IMF about this proposal.
Copyright Business Recorder, 2025