ISLAMABAD: Korangi Association of Trade and Industry (KATI) has urged Federal Minister for Energy (Power Division) Sardar Awais Ahmad Khan Leghari to order an independent audit of Power Planning and Monitoring Company (PPMC) and Independent System and Market Operator (ISMO), alleging serious shortcomings in the data, modelling and analysis underpinning the Incremental Consumption Package (TRF-100).
In a letter to the Power Minister, KATI President Shaikh Umer Rehan called for personal intervention, warning that industrial consumers may have been burdened with billions of rupees in additional electricity costs because of deficiencies in determining the actual marginal cost of incremental consumption.
The Association maintained that the package, approved by National Electric Power Regulatory Authority (NEPRA) on December 9, 2025, at Rs22.98 per kilowatt-hour (kWh), was based on the assurance that participating consumers would pay at least the actual marginal cost of electricity supply and that no other consumers would bear any portion of the package’s cost.
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According to KATI, NEPRA’s decision of November 6, 2026, on the semi-annual review of the package has highlighted serious shortcomings in the information and analysis that the Power Division, PPMC and ISMO were required to provide.
The association noted that the review was due after May 31, 2026, while NEPRA had written to the Ministry on June 16 seeking the necessary information. However, the data submitted on July 29 reportedly contained no marginal-cost analysis. On September 9, the Ministry requested NEPRA to undertake the review itself. The regulator, in its response of October 15, stated that the Ministry’s submission did not furnish the specific analysis and recommendations sought.
The association pointed out that NEPRA’s tariff team estimated the cost of incremental consumption at approximately Rs31.83 per unit, which came down to Rs29.65 after incorporating ISMO’s operational tags, against the approved rate of Rs22.98 per unit.
KATI argued that the difference between the approved package price and the estimated marginal cost had effectively been recovered from other consumers through the Fuel Cost Adjustment (FCA), citing observations by dissenting members of NEPRA.
The association expressed concern that the resulting financial burden could run into billions of rupees, making it necessary to establish the actual cost of the package and identify the amounts recovered from consumers through the FCA.
KATI said it had repeatedly raised concerns regarding the package, including through written submissions on November 8, 2025, December 2025, February 4, May 13 and October 5, 2026, as well as during NEPRA hearings.
It maintained that the package was likely to shift existing captive power consumption to the national grid rather than generate genuinely additional electricity demand, potentially undermining its intended economic benefits.
The association also questioned the absence of stakeholder consultation by PPMC and ISMO, despite NEPRA having called for consultation during FCA hearings.
Referring to NEPRA’s findings, KATI said the Chairman had recorded that the marginal price in proper form had not been provided to the regulator by either ISMO or PPMC, although both organisations were duty-bound to furnish the analysis. The regulator, according to the association, also concluded that PPMC’s methodology did not determine the actual marginal cost of serving incremental consumption.
KATI said the provisional price of Rs25.30 per unit was not an endorsement of the original generation-mix assumptions, while a dissenting member had reportedly described the figure as a random number.
The association expressed particular concern that PLEXOS modelling runs with and without the incremental consumption package remained outstanding nearly 11 months after its approval.
It argued that the reliability of PLEXOS results depended on the accuracy of inputs, which NEPRA had found unvalidated, while the overall analysis remained incomplete.
KATI maintained that it could not place confidence in the marginal-cost calculations of PPMC or ISMO until the underlying data, modelling inputs and processes were independently verified.
The association also questioned the operational preparedness of ISMO, observing that its inability to produce a timely marginal-cost analysis raised concerns about its capacity to operate the wholesale electricity market, where scheduling, pricing and settlement mechanisms would involve substantially greater complexity.
The letter further highlighted the Power Division’s own assessment of an annual contribution-margin loss of approximately Rs180 billion due to declining electricity sales.
KATI argued that the underlying issue was the excessive industrial electricity tariff, which had encouraged industries to leave the national grid because the price of electricity exceeded its cost of service.
It maintained that the incremental consumption package and proposed two-part tariff were temporary arrangements that did not address the fundamental problem of high base tariffs.
According to the association, only a meaningful reduction in industrial electricity prices could encourage industries to return to the grid, restore electricity sales and distribute fixed system costs over a larger volume of consumption.
KATI warned that introducing a two-part tariff based on similarly unvalidated assumptions could reproduce the same problems and potentially impose additional financial burdens on consumers.
The association has therefore requested the Power Minister to appoint one of the Big Four accounting firms, supported by power-sector modelling specialists, to independently audit the data, PLEXOS inputs and processes of PPMC and ISMO.
It also called for the audit report to be shared with NEPRA and relevant stakeholders to ensure transparency and confidence in the electricity pricing framework.
KATI urged the government to address the estimated Rs180 billion contribution-margin shortfall through a meaningful reduction in industrial electricity tariffs, bringing all voltage levels from B1 to B4 to their NEPRA-determined cost of service, rather than recovering the amount from ordinary consumers. The association further requested that the proposed two-part tariff be deferred until its modelling had been independently audited and shared with stakeholders.
It also called for strict compliance with NEPRA’s deadlines of November 25 and December 3, 2026, and disclosure of the amounts recovered from consumers through the FCA on account of the incremental consumption package.
Copies of the letter have also been forwarded to Special Assistant to the Prime Minister on Energy Lt. Gen. Muhammad Zafar Iqbal (Retd), NEPRA Chairman Waseem Mukhtar and Federal Minister for Commerce Jam Kamal Khan for information.
Copyright Business Recorder, 2026
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