Electricity Tariff May Rise by Rs2.50 Per Unit

ISLAMABAD: Electricity consumers may face an increase of approximately Rs2.50 per unit in tariffs for July 2026 as the government seeks to recover more than Rs34 billion from consumers of distribution companies (Discos) and K-Electric through the monthly Fuel Charges Adjustment (FCA) mechanism.

According to reports, the anticipated positive FCA is largely linked to stronger electricity consumption during July and increased dependence on relatively expensive fuels, including spot-market LNG and furnace oil, to fulfil demand during peak hours.

The National Electric Power Regulatory Authority (Nepra) recently approved a positive FCA of Re0.7503 per unit for June 2026, significantly below the Rs1.20 per unit adjustment requested by the Central Power Purchasing Agency-Guaranteed (CPPA-G).

Nepra will examine multiple cost components included in CPPA-G’s FCA request before determining the applicable adjustments. Individual FCAs will then be calculated for each distribution company based on electricity sourced through CPPA-G, bilateral arrangements with Small Power Producers (SPPs) and Captive Power Producers (CPPs), as well as net-metering arrangements included within each Disco’s electricity basket.

The potential increase comes at a challenging time for the industrial sector, which is already facing elevated electricity costs. Export-oriented businesses are also confronting additional pressure amid worsening regional conditions in the Middle East.

During a recent meeting, Nepra expressed concern over partial-loading charges estimated at around Rs4.9 billion and asked CPPA-G to outline measures for bringing these costs down.

CPPA-G explained that the charges were not primarily caused by operational inefficiencies. Instead, they were linked to declining daytime electricity demand as rooftop solar generation expands. According to the agency, conventional power plants are consequently required to operate at reduced output during solar-generation hours before increasing production to meet the evening demand peak.

CPPA-G committed to taking steps to reduce these additional costs. Nepra noted that partial-loading charges in June 2026 were approximately Rs1 billion higher than during the same month of the previous year.

The Independent System and Market Operator (ISMO) cautioned that shutting down power plants altogether to avoid partial-loading costs could create substantial additional expenses because of the high costs involved in restarting generation units.