Multi Year Tariff mechanism: TESCO, PESCO seek hike in tariffs for five years

ISLAMABAD: Tribal Areas Electricity Supply Company Limited (TESCO) and Peshawar Electric Supply Company (PESCO) have sought an increase in their tariffs for five years (2025-29) under Multi Year Tariff (MYT) mechanism.

Peshawar Electric Supply Company (PESCO has sought fixation of its tariff at Rs 41.21 per unit for FY 2025-26, Rs 38 per unit for 2026-27, Rs 38.31 per unit for 2027-28, Rs 38.58 per unit for 2028-29 and Rs 38.75 per unit for 2029-30.

The DISCO has sought NEPRA’s approval for revenue requirement of Rs 384.128 billion for 2025-26, Rs 366.958 billion for 2026-27, Rs 382.364 billion for 2027-28, Rs 398.598 billion for 2028-29 and Rs 415.751 billion for FY 2029-30. TESCO has requested for an average increase of Rs 4.35 per unit for five years starting from 2025-26 to 2029-30 under Multi Year Tariff (MYT) mechanism.

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National Electric Power Regulatory Authority (NEPRA) will conduct a public hearing on November 3, 2025 wherein both the DISCOs will present their cases.

TESCO recently conducted a third-party independent loss study to assess the efficiency and performance of its power distribution system. The study concluded that total system losses stand at 12.02 percent, reflecting both technical and structural challenges within the network. However, through planned operational improvements and system optimization, TESCO has projected actual losses for FY 2024-25 at 9.6 percent.

For the control period spanning FY 2025-26 to FY 2029-30, TESCO has maintained a constant projected loss level of 9.6 percent. This projection is underpinned by the company’s investment strategy focused on network expansion, adherence to N-i contingency standards, and the reallocation of load from PESCO’s grid to TESCO’s own grid stations. These efforts are expected to enhance system efficiency and stabilize loss levels despite anticipated increases in consumer demand.

Accordingly, for the control period, TESCO has projected Transmission and Distribution (T&D) losses at 8.6 percent, broken down as 0.78 percent transmission losses and 7.82 percent distribution losses— with the latter being within TESCO’s direct operational scope.

The projected unit sales for the control period from FY 2025-26 to FY 2029- 30 are as follows: 1,352 million units in FY 2025-26, 1,368 million units in FY 2026-27, 1,388 million units in FY 2027-28, 1,410 million units in FY 2028-29, and 1,433 million units in FY 2029-30.

The combined Transmission and Distribution (T&D) losses have been projected at a constant 8.6 percent for the entire control period. This comprises 8.78 percent transmission losses and 7.82 distribution losses, reflecting TESCO’s commitment to attaining loss levels through targeted investments, operational improvements and structural reforms.

TESCO has sought for the projected PPP an amount of Rs. 60,930 million in FY 2025-26. Rs 64.491 million in FY 2026-27,Rs72,681 million in FY 2027-28, Rs 73,157 million in FY 2028-29 increasing to Rs. 78,219 million in FY 2029-30, in accordance with projected demand and CPPA allocations under the single-buyer model.

Approval is sought for the Distribution Margin of the Supply of Power Business, which covers all prudently incurred O&M costs, depreciation, return on rate base andother components, projected at Rs. 5,045 million in FY 2025-26, Rs. 5,418 million in FY 2026- 27,Rs. 5.992 million in FY 2027 28, Rs. 6.613 million in FY 2028-29 and rising to Rs. 7,258 million in FY 2029-30.

TESCO has further sought approval for projected other income estimated at Rs. 736 million in FY 2025-26, Rs. 782 million in FY 2026-27, Rs. 845 million in FY 2027-28, Rs. 911 million in FY 2028-29 and gradually rising to Rs. 960 million by FY 2029-30.

Approval has also been sought for the Weighted Average Cost of Capital (WACC), proposed at 13.50 percent in FY 2025-26, 17.41 percent in FY 2026-27, 15.91 percent in FY 2027-28, and 12.91 percent for FY 2028-29 and 11.41 for FY 2029-30, in accordance with projected financial conditions and capital requirements over the control period.

According to the tariff petition, TESCO has prayed an increase of Rs 3.73 per unit for 2025-26, Rs 3.96 per unit for 2026-27, Rs 4.32 per unit for 2027-28, Rs 4.69 per unit for FY 2028-29 and Rs 5.06 per unit for FY 2029-30.

Copyright Business Recorder, 2025