Govt seeks NEPRA nod for fixed charges, revised national power tariff

ISLAMABAD: The Federal Government has approached NEPRA seeking approval for a major overhaul of the uniform electricity tariff structure, including the introduction of fixed monthly charges for domestic consumers and revised rates for DISCOs and K-Electric to ensure recovery of rising fixed costs.

According to available documents, the federal government has formally moved the National Electric Power Regulatory Authority (NEPRA) for approval of a major restructuring of Pakistan’s electricity tariff framework, seeking rationalization of the uniform consumer-end tariff for ex-WAPDA distribution companies (XWDISCOs) and K-Electric, including the introduction and revision of fixed charges for domestic consumers (except lifeline category) in an effort to ensure full recovery of the power sector’s mounting fixed costs.

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

The government based its justification on the National Electricity Policy 2021, approved by the Council of Common Interests (CCI), which under Clause 5.6.1 states that the financial sustainability of the power sector depends on the recovery of the full cost of service through an efficient tariff structure that ensures liquidity. The policy further states under Clause 5.6.4 that financial self-sustainability would eventually eliminate the need for government subsidies, except for lifeline, industrial, or agricultural consumers as per prevailing government considerations.

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

According to the motion, the government has argued that Pakistan’s power sector is currently facing a serious structural imbalance between the determined revenue requirement and the mechanism through which tariffs are recovered. It stated that a substantial portion of the sector’s costs comprises fixed charges, while the current tariff structure is largely volumetric, meaning it recovers most of the cost through per-unit electricity consumption.

The government maintained that this structural misalignment has become more critical due to the rapid expansion of off-grid solar energy, which has reduced grid consumption for many consumers. As a result, the burden of recovering fixed costs is increasingly being shifted to other consumers, creating disproportionate pressure, increased cross-subsidization, and accelerated migration to alternative energy solutions.

The motion states that it has therefore become necessary to rationalize the tariff structure by recalibrating fixed and variable components, while remaining within the already determined revenue requirement and the approved subsidy limits. The government has proposed that such rationalization is essential to ensure equitable cost recovery and the long-term financial sustainability of the national grid.

As part of this restructuring, the government has proposed the introduction and revision of fixed charges for all domestic consumers, except lifeline consumers.

The government informed NEPRA that the Cabinet has already approved the proposed uniform tariff under Case No. 89/Rule-19/2026/111 on February 4, 2026, and the matter has now been submitted to NEPRA for consideration under the relevant legal provisions. The motion states that the tariff rationalization is being proposed without changing the targeted tariff differential subsidy of Rs249 billion, and includes policy guidelines for revision of rates and application of fixed charges to be incorporated into NEPRA’s determined schedule of tariff.

Once considered and approved by NEPRA, the revised tariff structure will be notified through modification in SROs 41 to 52(I)/2026 dated January 13, 2026, in conformity with earlier notifications.

The motion also covers K-Electric, stating that under the National Electricity Policy framework, the government may maintain a uniform consumer-end tariff for K-Electric and state-owned DISCOs even after privatization through direct or indirect subsidies. Accordingly, the government stated that the applicable uniform tariff for K-Electric must also be modified to align it with the proposed uniform national tariff for XWDISCOs. This proposal has also been approved by the Cabinet and submitted to NEPRA for consideration.

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

The key requests include revision of the government applicable uniform tariff and issuance of a revised schedule of tariff while staying within the determined revenue requirement of XWDISCOs and the already budgeted tariff differential subsidy of Rs249 billion. The government has also sought incorporation of fixed charges in NEPRA’s determined schedule of tariff with adjustment of variable rates to ensure alignment with the already determined revenue requirement of the DISCOs.

Separately, the motion filed for K-Electric seeks NEPRA’s reconsideration and issuance of a modified uniform tariff for K-Electric to ensure uniform tariff across the country while recovering K-Electric’s revenue requirements as determined by NEPRA. The motion stated that this will be carried out by keeping in view the proposed targeted subsidy and/or cross subsidies to be notified in the official gazette through modification in SRO No. 575(I)/2019, as amended from time to time.

The government’s motion is expected to trigger serious debate as the proposed restructuring may lead to a shift of electricity cost recovery toward fixed monthly charges, potentially impacting consumers who have already reduced their grid dependence through solar installations or low consumption patterns.

The move also reflects growing concerns within the government that increasing off-grid solar adoption is eroding the revenue base of the grid system, forcing remaining consumers to shoulder a higher share of fixed costs, which could further accelerate the trend of migration away from the grid unless the tariff structure is redesigned.

The case is now before NEPRA for deliberation and approval, with the revised tariff structure likely to have significant implications for household electricity bills, uniform tariff policy, and the future financial sustainability of Pakistan’s power sector.