Extension of Rs14bn subsidy: MoF’s ‘no’ forces PD to go for UoSC across Discos & KE

ISLAMABAD: The Finance Ministry’s clear no on extension of subsidy of Rs14 billion from fiscal space has, reportedly, compelled the Power Division to seek uniform Use of System Charges (UoSC) across the Discos and K-Electric, which will financially hit the Supplier of Last Resort (SoLR), well-informed sources told the Business Recorder.

The National Electric Power Regulatory Authority (NEPRA) held a public hearing last week, when industry opposed Power Division’s plan.

The Power Division argued that since the Commercial Market Operations Date (CMOD) had been declared on January 22, 2026, and the first market auction was scheduled for June 2026, the operationalization of market liberalization reforms could not be delayed, and a uniform UoSC must be determined at the earliest.

READ MORE: Uniform UoSC plan: Power regulator questions cross-subsidy component

The Power Division briefed the ECC that NEPRA had determined the Use of System Charges (UoSC) to the extent of grid charges for DISCOs in its determination of December 18, 2025.

The decision had been intimated to the Federal Government for filing of an application for uniform application of the determined grid charges across all DISCOs, so that the same might be imposed uniformly upon all Bulk Power Consumers (BPCs) and other open access users, as envisaged in the NE Plan and Eligibility Criteria (Electric Power Supplier Licenses) Rules, 2023.

The ECC was further apprised that NEPRA, in its letter of September 17, 2025,had requested NEPRA to consider K-Electric’s numbers for uniformity of UoSC to comply with the requirement of Strategic Directive (SD) 88, because in case K-Electric numbers were not considered, this would give rise to unintended subsidy implications.

The Power Division was of the considered view that no subsidy should arise from the application of uniform UoSC.

The Power Division further informed the ECC that NEPRA through a letter of September18, 2025 maintained that the incorporation of provisional working/petition of K-Electric’s UoSC with that of UoSC of DISCOs, had no basis under the NEPRA Act.

NEPRA further referred to SD 87 of the Plan, which required uniform grid charges for all the bulk power consumers to ensure a level playing field, and interpreted that if the tariff numbers of K-Electric were included in the determination of the uniform open-access charges, the amount to be paid by either the BPCs opting for open access or by similarly placed BPCs of existing SoLRs would be different, which appeared to be in contravention of the Plan.

Accordingly, NEPRA gave UoSC determination for eleven DISCOs, which would also be applicable to K-Electric consumers after uniformity based on eleven DISCOs and attract subsidy/surcharge if K-Electric users opt for open access.

The Power Division apprised the ECC that the NEPRA’s direction with respect to filing of uniform tariff application by the Federal Government is contradictory to the National Electricity Plan 2023-27 (NE Plan) read with Eligibility Criteria (Electric Power Supplier License) Rules 2023 (Supplier Rules) which obligated the Authority to proceed on its own accord viz-a-viz determination and imposition of a uniform Use of System Charge/Open Access Charge/Grid Charges for all DISCOs (including K-Electric) and simultaneously provide inter-DISCOs settlement mechanism as envisaged as per the Strategic Directives 87 and 88 of the NE Plan.

Furthermore, SD 89 of NE Plan reads that each Supplier of Last Resort (SoLR) shall file a petition to the Regulator for determination of the open access charges.

K-Electric has also filed a petition for the determination of UoSC. Accordingly, the subject determination should have also been made for K-Electric and accordingly incorporated in the working of uniform Use of System Charge.

Copyright Business Recorder, 2026