Govt considers optional multi-tariff ToU system for industries to cut electricity costs

ISLAMABAD: In a major move to ease electricity costs and improve efficiency, the government is considering a new optional multi-tariff Time-of-Use system for industries, allowing consumers to optimize power usage and potentially lower their energy bills.

According to the Power Division, under a special initiative led by Sardar Awais Ahmed Khan Leghari, the Division is actively working to introduce an optional tariff mechanism to facilitate industrial consumers while enhancing overall efficiency in electricity utilization. Several internal consultative and technical meetings have already been held to deliberate on the proposed framework.

The new model will provide industrial consumers the flexibility to opt for a multi-slab tariff structure, where electricity pricing will be based on average marginal cost signals across different time-of-use periods. This approach is designed to reflect the actual cost of electricity supply during peak and off-peak hours, enabling more informed and efficient consumption decisions.

Under the proposed structure, the tariff will include a fixed component determined on the basis of Maximum Demand Indicators, which is expected to be relatively higher in order to discourage excessive peak consumption. At the same time, the variable energy charges will be rationalised and aligned more closely with actual energy costs, making the pricing system more transparent and cost-reflective.

Industry sources said that the mechanism will encourage industries to shift their operations towards lower-cost periods, resulting in improved load management and better utilization of the power system. Increased consumption during off-peak hours is expected to enhance the overall system load factor, while a reduction in peak demand will help ease pressure on the grid and reduce the need for expensive capacity additions.

The initiative is also expected to support industrial productivity and competitiveness by offering more predictable and potentially lower electricity costs, making it a key step toward sustainable industrial growth and long-term economic development in Pakistan.

Following the formulation of initial technical proposals, the minister has directed that the proposed regime be refined through extensive stakeholder consultations to ensure its inclusivity and effectiveness. In this regard, engagements will be held with industrial consumers, chambers of commerce, and trade bodies across the country, and their feedback will be incorporated into the final design of the mechanism.

The first consultative conference on the proposed tariff system is scheduled to be held online on March 26, marking the start of a broader consultation process before the policy is finalised.