The government has indicated that electricity prices may increase this summer due to reduced water availability for hydropower generation, leading to greater dependence on imported fuels. Officials shared this outlook during a public hearing on the negative fuel cost adjustment (FCA) for January electricity consumption.
At the hearing, it was reported that a negative FCA of Rs1.23 per unit is currently in effect for ex-Wapda distribution companies (Discos) in February. As a result, consumers will see a reduction of only 77 paisa per unit in March.
Chairman National Electric Power Regulatory Authority (Nepra) Waseem Mukhtar questioned how the government plans to meet the rising summer electricity demand, given lower-than-expected rainfall and snowfall.Â
The National Power Control Centre (NPCC) management informed Nepra that water storage levels in reservoirs are below projections, which could lead to increased reliance on regasified liquefied natural gas (RLNG) for power generation, a costlier alternative to hydropower.Â
In response, Nepra has invited the Wapda chairman for a briefing on the expected hydropower supply in the coming months.
The hearing also revealed that electricity demand in January was 4.4% lower than projected in the reference tariff and 2% lower than in January last year.Â
Over the first seven months of FY2024-25, overall electricity consumption declined 3.3%, with significant reductions in industrial and agricultural sectors.
Rehan Akhtar from the Central Power Purchasing Agency (CPPA) attributed the decline in agricultural electricity consumption to the shift of tube wells to solar power. He noted that the drop in industrial power usage was linked to broader economic factors, as reflected in reduced industrial output.
The Power Division has proposed applying the negative FCA to domestic consumers using up to 300 units per month and agriculture consumers, stating that a formal request has been sent to Nepra to ensure the benefit of lower fuel costs reaches all consumers.
This marks the seventh consecutive month of fuel cost reduction, primarily due to higher base tariffs approved by Nepra, which saw a 20% increase effective July 1, 2024. In January, 71% of total electricity supply came from domestic fuel sources, with nearly 15% produced at zero fuel cost.
According to the CPPA, 8,153 gigawatt-hours (GWh) of electricity were generated in January at a fuel cost of Rs88 billion, averaging Rs10.79 per unit. Of this, 7,816 GWh were supplied to Discos at a total cost of Rs86 billion, averaging Rs11 per unit.
