Government Seeks Nepra Approval for Major Electricity Tariff Overhaul

ISLAMABAD: The federal government has approached the National Electric Power Regulatory Authority (NEPRA) seeking approval for a sweeping restructuring of the uniform electricity tariff regime, proposing fixed monthly charges for domestic consumers and revised tariff rates for DISCOs and K-Electric to ensure recovery of escalating fixed costs.

According to official documents, the government has formally submitted a motion to NEPRA requesting approval for a comprehensive revamp of Pakistan’s power tariff framework. The proposal focuses on rationalizing the uniform consumer-end tariff for ex-WAPDA distribution companies (XWDISCOs) and K-Electric, including the introduction and revision of fixed charges for all domestic consumers except those in the lifeline category, aimed at securing full recovery of the sector’s rising fixed expenses.

In its motion and accompanying policy guidelines, the government referred to tariff determinations issued for XWDISCOs under the Multi-Year Tariff (MYT) regime, including the “Consumer End Tariff Recommendation” dated January 7, 2026, and the subsequent determination issued on January 12, 2026, later notified through SROs 41 to 52(I)/2026 on January 13, 2026.

The government grounded its request in the National Electricity Policy 2021, approved by the Council of Common Interests (CCI). Under Clause 5.6.1, the policy emphasizes that the power sector’s financial sustainability hinges on full cost recovery through an efficient tariff structure that ensures liquidity. Clause 5.6.4 further states that achieving financial self-sufficiency would gradually eliminate the need for subsidies, except for lifeline, industrial, or agricultural consumers, subject to prevailing government considerations.

The motion further notes that under this policy framework, the government may continue proposing a uniform tariff across regions and consumer categories, while the regulator, in the interest of consumers, is mandated to determine and notify a uniform tariff, inclusive of quarterly adjustments, for all state-owned distribution companies.

According to the filing, the government argued that Pakistan’s power sector is currently grappling with a structural mismatch between the determined revenue requirement and the existing tariff recovery mechanism. A large portion of sectoral costs is fixed in nature, while the prevailing tariff model relies heavily on volumetric, per-unit consumption charges.

The government maintained that this imbalance has intensified with the rapid expansion of off-grid solar power, which has reduced grid electricity consumption among many users. Consequently, fixed cost recovery is increasingly being shifted onto remaining consumers, leading to higher cross-subsidization, disproportionate cost burdens, and faster migration toward alternative energy solutions.

The motion states that tariff rationalization has therefore become unavoidable, requiring recalibration of fixed and variable components while remaining within the already approved revenue requirements and subsidy ceilings. Such restructuring, the government argued, is critical to ensure fair cost recovery and long-term financial viability of the national power grid.

As part of the proposed overhaul, the government has recommended introducing and revising fixed monthly charges for all domestic consumers, excluding lifeline users.

The government informed NEPRA that the Cabinet had already approved the proposed uniform tariff under Case No. 89/Rule-19/2026/111 on February 4, 2026, and the proposal has now been formally submitted to the regulator for review under applicable legal provisions. The motion clarifies that the tariff rationalization does not alter the targeted tariff differential subsidy of Rs249 billion and includes detailed policy guidelines for revising rates and applying fixed charges within NEPRA’s tariff schedule.

Upon approval, the revised tariff framework will be notified through amendments to SROs 41 to 52(I)/2026 dated January 13, 2026, in line with earlier notifications.

The proposal also extends to K-Electric, with the government stating that under the National Electricity Policy, a uniform consumer-end tariff may be maintained for K-Electric and state-owned DISCOs even after privatization through direct or indirect subsidies. Accordingly, the government has sought modification of K-Electric’s tariff to align it with the proposed national uniform tariff for XWDISCOs, a proposal already cleared by the Cabinet and submitted to NEPRA.

In its motion for XWDISCOs filed under Sections 7 and 31 of the NEPRA Act, read with Rule 17 of the NEPRA Tariff Rules, the government requested NEPRA to revisit and issue a revised uniform tariff schedule incorporating targeted subsidies, inter-DISCO rationalization, and tariff restructuring in accordance with the proposed policy guidelines.

Key requests include revision of the applicable uniform tariff while remaining within the determined revenue requirement of XWDISCOs and the budgeted tariff differential subsidy of Rs249 billion. The government has also sought incorporation of fixed charges into NEPRA’s tariff schedule, with corresponding adjustments to variable rates to ensure alignment with approved revenue requirements.

Separately, the motion for K-Electric seeks NEPRA’s approval for a modified uniform tariff to maintain nationwide tariff parity while ensuring recovery of K-Electric’s revenue requirements as determined by the regulator. This would be implemented by factoring in targeted subsidies and/or cross-subsidies to be notified through amendments to SRO No. 575(I)/2019.

The government’s proposal is expected to spark significant debate, as the restructuring could shift electricity cost recovery toward fixed monthly charges, potentially affecting consumers who have reduced grid reliance through solar adoption or low usage patterns.

The move underscores growing concern within the government that accelerating off-grid solar adoption is weakening the grid’s revenue base, forcing remaining consumers to absorb a larger share of fixed costs — a trend that could further hasten migration away from the grid unless tariffs are redesigned.

The matter is now before NEPRA for deliberation, with the proposed tariff overhaul likely to have far-reaching implications for household power bills, the uniform tariff policy, and the long-term financial sustainability of Pakistan’s power sector.