Fixed Charges Linked to Sanctioned Load, Not Per Connection
The government has announced a major change in electricity billing policy. Fixed power charges will now be levied per kilowatt (kW) of sanctioned load. They will not be charged per connection.
The decision was disclosed during a public hearing on a proposed Rs4.04 per unit cut in industrial power tariffs. The hearing was conducted by the National Electric Power Regulatory Authority (Nepra). Officials from the power division and industrial representatives supported the move.
No representative appeared for over 28.5 million residential consumers. These consumers will now face new fixed monthly charges.
According to the power division, residential consumers will pay between Rs200 and Rs675 per kW per month. The charge will depend on their sanctioned load. It will apply regardless of actual electricity consumption.
For example, a consumer with a 2kW sanctioned load will pay Rs400 per month at Rs200 per kW. A consumer with a 5kW load will pay Rs2,500 per month at Rs500 per kW. A 6kW load will attract Rs4,050 per month at Rs675 per kW.
Officials said this is the first time a two-part tariff system is being introduced for residential consumers. The new structure aims to recover Pakistan’s Rs2.56 trillion annual capacity cost.
Industrial Tariff Reduced to Boost Global Competitiveness
The government confirmed that the industrial sector has now been fully freed from cross-subsidy. Officials described it as a major reform. They called it a first step toward improving industrial competitiveness.
The industrial electricity tariff will fall to around 11.50 cents per unit. Previously, it was close to 13 cents per unit. Authorities admitted that the new rate is still higher than some regional competitors. However, they stressed that it no longer includes cross-subsidy.
The reduction will lower cross-subsidy by about Rs101 billion. At the same time, fixed charge recovery from residential users will increase by Rs132 billion. Total fixed charge collection will rise to Rs355 billion, or 10 percent of the tariff structure. It currently stands at Rs223 billion, or 7 percent. These figures exclude 18 percent GST and other duties.
Officials said Rs31 billion collected from fixed charges will reduce variable tariffs for consumers using more than 300 units per month. This step aims to discourage them from shifting to solar energy or going off-grid. The remaining Rs101 billion will ease the financial burden on industry.
Residential Consumers Face Higher Average Tariffs
Financial advisory firm Optimus Capital Management has estimated the impact on domestic consumers. The report shows a sharp increase in average tariffs due to fixed charges.
For protected consumers using up to 100 units, the average cost may rise by 76 percent. This equals an increase of about Rs8 per unit. For those consuming 101 to 200 units, the increase could be Rs4 per unit, or 31 percent.
For non-protected consumers, the impact is higher. The first 100 units may see a 74 percent rise, or Rs16.50 per unit. The 101-200 unit slab may increase by 21 percent, or about Rs6 per unit.
The net average tariff will increase across most consumption categories. Consumers using 201-300 units may see a 13 percent rise. Those using 301-400 units may face a 6.5 percent increase. Consumers in the 401-600 unit bracket may see a 5.8 percent hike. Usage above 600 units may increase by about 5 percent.
The only relief will be for time-of-use consumers with sanctioned loads above 5kW. They may see a net reduction of around 7 percent.
The policy marks a major shift in Pakistan’s electricity pricing system. It aims to support industry. However, it places a heavier burden on residential consumers.
