Electricity FCA Relief for Consumers, But Power Plant Shutdowns Keep Costs High

Electricity consumers are set to benefit from a fuel cost adjustment (FCA) relief of Rs1.03 per unit for December 2024, potentially reducing their electricity bills in February 2025.

However, concerns remain over the extended shutdown of the 969-megawatt Neelum-Jhelum hydropower plant, which has deprived consumers of cheaper electricity, thus keeping power costs higher than they could have been.

The National Electric Power Regulatory Authority (NEPRA) recently held a public hearing to review a petition from the Central Power Purchasing Agency-Guarantee (CPPA-G), which sought approval for the FCA reduction.

If approved, the tariff adjustment will apply to all eligible consumers, excluding lifeline users, K-Electric customers, and electric vehicle charging stations.

CPPA-G officials acknowledged that the seasonal winter package had helped lower electricity prices but also highlighted the negative impact of the non-operational Neelum-Jhelum hydropower plant. They suggested that had the plant been operational, power prices could have been further reduced.

Another major issue raised during the hearing was the non-functioning of the 747MW Guddu power plant, which has also contributed to increased electricity costs. CPPA-G did not provide a clear explanation for the plant’s inactivity.

Consumers expressed frustration over the ongoing inefficiencies in the power system, particularly the frequent transmission failures during hot and rainy weather. They called for stronger measures to reduce costs and improve the reliability of the system.

According to CPPA-G data, nuclear power was the largest contributor to the energy mix in December 2024, generating 2,065 gigawatt hours (GWh), or 26.48% of total electricity production. Hydroelectric power followed with 22.8%, while re-gasified liquefied natural gas (RLNG)-based plants contributed 20.7%. With fossil fuel sources like natural gas and coal remaining costly, nuclear power has become a crucial part of Pakistan’s energy strategy due to its lower cost and environmental benefits.

NEPRA had already announced a reduction in electricity tariffs for both ex-WAPDA distribution companies (DISCOs) and K-Electric consumers. The regulator reduced FCA charges by up to 75 paisa per unit for DISCOs due to fuel cost variations in November 2024, while K-Electric consumers received an adjustment of Rs0.4919 per kilowatt-hour (kWh) for October 2024. These reductions were reflected in January 2025 bills.

NEPRA also reviewed transmission and transformation (T&T) losses incurred by the National Transmission and Despatch Company (NTDC). The company reported 244.158 GWh in provisional losses, which accounted for 2.946% of total energy delivered in November 2024, exceeding its 2.639% allowance at the 500kV and 220kV levels. Meanwhile, the Pak Matiari-Lahore Transmission Company (PMLTC) reported T&T losses of 19.528 GWh (3.391%), which remained within the 4.3% permitted limit for its high-voltage, direct-current line