NEPRA raises power tariff on extra industrial and agricultural use to Rs25.30 per unit

• The provisional rate rises from Rs22.98 per unit and applies from the November 2026 billing cycle.
• Eligible industrial and private agricultural consumers of ex-WAPDA distribution companies and K-Electric pay the revised rate on usage above their reference levels.
• Two NEPRA members sought a temporary suspension, citing incomplete cost data and the risk of higher charges for consumers outside the scheme.

The National Electric Power Regulatory Authority (NEPRA) has provisionally raised the electricity rate for additional consumption by eligible industrial and private agricultural customers from Rs22.98 to Rs25.30 per unit. The increase takes effect from the November 2026 billing cycle and will remain in place until the regulator issues a further decision after reviewing the cost of supplying the extra electricity.

The November 6 decision covers customers of ex-WAPDA distribution companies and K-Electric who qualify for the Incremental Consumption Package. NEPRA rejected the Power Division’s proposal to apply the increase from October because billing for that month was largely complete. November bills issued before the decision is notified will be adjusted in later billing cycles in line with statutory requirements and the regulator’s directions. The decision has been sent to the federal government for notification in the official Gazette under Section 31(7) of the NEPRA Act, 1997.

The Power Division filed its proposal for the package on November 6, 2025. NEPRA approved it on December 9, and it was notified on December 10. The three-year scheme applies to eligible industrial and private agricultural customers on both time-of-use and non-time-of-use tariffs. Customers receive the package rate on electricity used above their reference consumption levels for December 2023 through November 2024. The scheme was designed to encourage productive electricity use, make better use of available generation capacity and give industries an incentive to stay on the grid.

NEPRA split over whether to keep the scheme running while its costs were still under review. Members Amina Ahmed, who oversees tariff and finance, and Engineer Maqsood Anwar Khan, who oversees development, called for a temporary suspension until the Power Division could support a revised rate with verifiable cost data. Chairman Waseem Mukhtar cast the deciding vote to continue the package at Rs25.30 per unit, giving the division another opportunity to submit the required information. NEPRA said the provisional rate would remain subject to review and that the actual cost of serving extra demand in past billing months was still undetermined.

The original approval required reviews every six months to check whether the revenue collected under the scheme covered the cost of supplying the additional electricity. On June 16, 2026, NEPRA asked the Power Division to assess actual marginal cost, compare costs with revenue and address stakeholder concerns. The division submitted data on July 29, but NEPRA returned it on September 2 because it lacked the required cost assessment, detailed calculations and recommendations. The regulator also directed the division to consult stakeholders before resubmitting its review.

On September 9, the Power Division asked NEPRA to conduct the review itself and hold a public hearing. Officials from the division, representatives of the Power Planning and Monitoring Company (PPMC) and other stakeholders attended the hearing on October 5. NEPRA then sought calculations and recommendations on actual costs, the tariff and its effective date, and whether prevailing fuel prices and supply conditions warranted suspending the scheme. The division responded on October 15, but NEPRA said the requested analysis was still missing. It followed up on October 16 and met PPMC and the Independent System and Market Operator (ISMO) on October 19 to discuss how to calculate the cost.

In a further submission on October 23, the Power Division recommended the increase to Rs25.30 per unit. PPMC, representing the division, calculated the interim rate by updating fuel prices in the generation mix assumed when the scheme was designed. Its proposal used a blend of 50 per cent spot regasified liquefied natural gas (RLNG) and 50 per cent RLNG supplied under contracts with Qatar. NEPRA said the original PLEXOS modelling reflected the fuel arrangements, plant availability and operating conditions expected at the time. Changes in fuel markets, contracted supplies, spot cargo use and the order in which plants were dispatched meant those assumptions needed to be tested again.

To estimate the cost of the additional demand, ISMO supplied hourly generation and dispatch records with operational tags under the Market Commercial Code. Hourly usage data for electricity consumed under the package were unavailable, so the analysis spread each month’s additional units evenly across its hours. The estimated demand was then adjusted for transmission and distribution losses and matched against hourly generation and the cost of power from dispatched plants.

The analysis put the estimated cost at the consumer end at Rs29.65 per unit for the review period. In several months, it exceeded the original rate of Rs22.98, reaching an estimated Rs42.01 in April and Rs49.65 in May. NEPRA said hourly generation costs differed from the figures used in monthly fuel cost adjustments, and the estimates excluded subsequent RLNG price adjustments approved through that process. It called for fresh PLEXOS modelling to compare actual fuel availability, generation requirements and dispatch conditions with and without the extra demand attributable to the scheme.

Under the package, positive fuel cost adjustments apply to additional units. Those units are exempt from negative fuel cost adjustments, quarterly tariff adjustments and the debt service surcharge. The original mechanism also spreads any gap between the approved rate and actual marginal cost across all consumers until NEPRA revises the rate. The regulator said consumers had already paid the difference through fuel cost adjustments during the delayed review. It also found that excluding the additional units from quarterly adjustments increased the share paid by consumers outside the scheme.

Several stakeholders, including industry representatives, argued that the first review should have been completed by June 2026 and that any increase should apply from then. They asked NEPRA to recover the amounts already borne by other consumers from package beneficiaries or credit the difference back through future fuel cost or quarterly tariff adjustments. Stakeholders also raised concerns about rising fuel prices, uncertain RLNG supplies and whether all usage receiving the incentive represented genuinely new demand. Some proposed suspending the package or limiting incentives to daytime hours when solar generation is available.

NEPRA said industries switching from captive generation to grid electricity could still help the scheme meet its objectives by increasing grid sales and improving use of available generation capacity. Its records showed that several thousand consumers across eligible categories had used the package. The regulator directed the Power Division to develop a way to identify customers with furnace oil-fired captive generation and take action where it confirms misuse of the scheme.

In their dissent, Ahmed and Khan said the original Rs22.98 rate was based on expected costs and included a contingency margin. They said beneficiaries were meant to pay at least the marginal cost of the electricity they used so other consumers would not have to cover any shortfall. NEPRA’s tariff team initially estimated the cost at about Rs31.83 per unit after accounting for losses. The figure fell to Rs29.65 after the team incorporated certain operational and must-purchase tags from ISMO.

The two members said the estimate could still be overstated because of generation dispatched to meet transmission or operating constraints, mandatory RLNG purchases and subsequent RLNG price revisions approved by the Economic Coordination Committee. They also pointed to discrepancies between hourly fuel-cost records and monthly fuel cost adjustments, as well as the need to model the power system with and without the additional demand. They said Rs29.65 per unit exceeded the standard off-peak tariff and could weaken the incentive to use more grid electricity. They also found that the ministry’s proposed Rs25.30 rate lacked a credible link to actual costs and recommended suspending the scheme until the division submitted verifiable historical calculations and a tariff proposal based on them.

NEPRA directed the Power Division and relevant agencies to submit a comprehensive review covering December 2025 to May 2026 and June to November 2026. The review must use PLEXOS to compare system operations with and without the package demand, using actual dispatch, fuel availability, applicable prices and operating constraints. It must reconcile its results with fuel cost adjustment calculations, account for operational tags under the Market Commercial Code and include plant-level data for K-Electric where applicable. The division must also explain its assumptions, gaps in the data and unresolved discrepancies, including how they affect its findings.

The regulator set November 25, 2026, as the deadline for the available data and analysis, with the remaining information for November 16 to 30 due by December 3. The Power Division must recommend a rate for each review period, assess whether revenues cover costs and advise whether the scheme should continue, be revised, suspended or terminated. NEPRA will assess the two periods separately. The original approval requires immediate termination if two consecutive reviews find that the tariff needs to rise.

In his additional note, Mukhtar criticised weak coordination among agencies working under the Power Division and said repeated requests had failed to produce reliable data in the required form. He warned that further delays could lead to suspension or termination of the package after the second review and that entities missing the deadlines could face legal proceedings. He asked that his observations be sent to the federal minister and the Power Division secretary for consideration and implementation.