National Electric Power Regulatory Authority approves marginal negative FCA for March 2026

ISLAMABAD:The National Electric Power Regulatory Authority (NEPRA) has approved a negative fuel charges adjustment (FCA) of Rs0.0102 per kilowatt-hour for March 2026, offering a marginal relief to electricity consumers across the country, including those of K-Electric.

The approval came after NEPRA conducted a public hearing on April 28, 2026, during which the Central Power Purchasing Agency-Guarantee (CPPA-G) had initially sought a positive adjustment of Rs0.2660 per unit. However, after detailed scrutiny, the regulator approved a slight negative adjustment.

According to NEPRA, separate FCAs for each distribution company (DISCO) were determined after factoring in energy procurement from CPPA-G, bilateral contracts (SPPs/CPPs), and net metering within each DISCO’s respective energy basket.

The revised FCA will apply to all consumer categories of K-Electric and WAPDA DISCOs, excluding lifeline consumers, Electric Vehicle Charging Stations (EVCS), and pre-paid electricity users who have opted for pre-paid tariff structures.

During the hearing, CPPA-G highlighted that overall electricity generation during March 2026 increased by 6.38 percent compared to reference assumptions. It also presented detailed generation data from multiple sources, comparing actual output with benchmark projections used in tariff calculations.

CPPA-G further noted that if K-Electric had not drawn electricity from the national grid, consumers could have faced a higher burden of Rs1.09 per unit on account of FCA and Rs2.72 per unit due to quarterly capacity payments, resulting in a combined impact of Rs3.81 per unit.

Stakeholders also discussed tariff methodology and adjustments. It was pointed out that the reference fuel cost component (FCC) had been revised under the CY 2026 tariff rebasing, making the current FCA outcome more aligned with actual generation patterns, particularly in light of changing hydrology assumptions.

Industry participants suggested that quarterly adjustment mechanisms be aligned more effectively to smooth future tariff shocks. NEPRA noted that such structural proposals could be considered during the next tariff rebasing exercise.

CPPA-G also indicated that FCA for April 2026 is expected to be higher due to the use of more expensive fuels during that month, although precise estimates cannot be provided in advance.

Other issues raised during the hearing included fuel mix decisions, RLNG procurement in spot markets, levy adjustments on furnace oil, and potential tariff relief mechanisms. Officials maintained that RLNG is being procured strategically as it remains comparatively cheaper than furnace oil and helps maintain system stability.

On transmission capacity for K-Electric, CPPA-G stated that the existing interconnection capacity with the national grid ranges between 2,100 MW and 2,400 MW, while further enhancement would require system upgrades. It was also clarified that current load shedding in K-Electric’s network is primarily revenue-based rather than demand-driven, despite available generation capacity.

According to the data submitted by CPPA-G with NEPRA, country’s hydel power generation rose significantly by over 62 percent, reaching 2,105 GWh in March 2026 compared to 1,297 GWh in the same month last year. In contrast, electricity generation from RLNG-fired power plants dropped sharply by 67 percent to 504 GWh from 1,528 GWh in March 2025.

Hydel generation remained the largest contributor to the overall energy mix, accounting for 23.55 percent (2,105 GWh) of total electricity generation. Nuclear power followed with a share of 21.95 percent (1,962 GWh), generated at a cost of Rs2.7836 per unit.

Coal-based generation also maintained a notable share in the energy mix. Local coal contributed 1,498 GWh (16.76 percent) at a cost of Rs11.14 per unit, while imported coal accounted for 1,234 GWh (13.80 percent) at Rs15.2324 per unit.

Electricity generation from gas-fired plants stood at 1,014 GWh, making up 11.34 percent of total output, at a cost of Rs13.3470 per unit. In comparison, RLNG-based generation declined to 504 GWh, contributing 5.64 percent to the total generation, at a cost of Rs24.5559 per unit.

Power generation from residual fuel oil (RFO)-based plants remained limited at 90 GWh, with a high generation cost of Rs36.1606 per unit.

Renewable energy sources, including wind, solar, and bagasse, contributed a relatively small share to the overall generation mix.

No electricity was generated using high-speed diesel (HSD) during the month, indicating avoidance of high-cost fuel options. However, electricity imports from Iran, though limited in volume, were recorded at a cost of Rs32.0085 per unit.

Fuel cost adjustments are a routine component of Pakistan’s electricity tariff mechanism, allowing variations in fuel prices and the generation mix to be passed on to consumers.

According to CPPA-G, a total of 8,939 GWh of electricity was generated in March 2026 at a cumulative fuel cost of Rs72.214 billion, resulting in an average fuel cost of Rs8.0783 per unit.

After accounting for prior period adjustments, sales to independent power producers, and transmission losses, the net electricity delivered to distribution companies stood at 8,664 GWh at an average cost of Rs8.2612 per unit.