ISLAMABAD: The Rs22.98 per kWh incremental electricity package for industrial and agricultural consumers faces review as marginal costs surged well above the fixed tariff, raising concerns over its sustainability and the burden on other consumers.
The National Electric Power Regulatory Authority (NEPRA) conducted a public hearing on Monday on the Power Division’s motion seeking reconsideration of the incremental consumption package for industrial and private agricultural consumers across XW-DISCOs and K-Electric.
The package applies to both Time-of-Use (ToU) and Non-Time-of-Use consumers and covers incremental electricity consumption during peak and off-peak periods.
The Power Division told the hearing that the fixed tariff of Rs22.98 per kilowatt-hour (kWh) had come under significant pressure as marginal electricity costs exceeded the package rate during several months.
According to the presentation, the weighted average marginal cost stood at Rs27.58/kWh from December through May, significantly above the package tariff. After adjusting for transmission and distribution losses, the weighted average marginal cost rose to Rs31.83/kWh.
Cost pressures were particularly high in April and May. The average marginal cost reached Rs36.71/kWh in April and Rs33.98/kWh in May, while the loss-adjusted marginal cost stood at Rs42.37/kWh and Rs39.22/kWh, respectively.
This meant the loss-adjusted marginal cost was Rs19.39 per unit above the package tariff in April and Rs16.24 per unit higher in May.
The Power Division said the difference between the package tariff and the higher marginal cost was, pending regulatory approval, being borne by other electricity consumers, potentially increasing the cross-subsidy burden on consumers outside the package.
The package also contains a safeguard linked to electricity consumption growth, requiring a review when combined industrial and agricultural consumption exceeds 25% above the baseline.
The presentation showed that consumption growth crossed the threshold in January, February and April, reaching 25.13%, 26.20% and 34.81%, respectively. Growth in the other months remained below the 25% threshold.
The semi-annual review mechanism provides another basis for examining the tariff. It requires reviews to maintain cost-revenue alignment and allows marginal tariffs to be adjusted where necessary.
The scheme is required to terminate if an upward adjustment becomes necessary during two consecutive reviews.
The Ministry of Energy (Power Division) was expected to submit the required information following stakeholder consultations in the first week of June 2026. However, the raw data was provided to NEPRA on July 29.
After NEPRA sought a proposal following stakeholder consultations, the Power Division responded on September 9, requesting the regulator to conduct proceedings on the matter.
According to the presentation, the six-month weighted average marginal rate stood at around Rs32/kWh, while four months had already passed in the second review period, raising questions over whether the package should be revised or suspended as marginal electricity costs remained substantially above the fixed rate.
The presentation also showed significant differences in effective break-even prices among consumer categories. For B1 peak consumers, the effective break-even price stood at Rs31.15/kWh, while B2 ToU consumers had a break-even price of Rs29.05/kWh.
The corresponding break-even rates for B3, B4 and B5 consumers were Rs30.03/kWh, Rs29.62/kWh and Rs32.91/kWh, respectively.
The figures placed the Rs22.98/kWh package tariff below the effective break-even price for all categories presented to the regulator.
NEPRA will now determine whether the existing rate continues to reflect the cost of sup
