APTMA urges review of peak hours to match national grid demand patterns

ISLAMABAD: The All Pakistan Textile Mills Association (APTMA) has urged the Power Division to re-evaluate the existing peak hours regime to better align it with actual demand patterns of the national grid, noting that the 8,000–10,000 megawatt (MW) gap between summer and winter demand indicates massive underutilisation of system capacity.

In a letter addressed to Minister for Power, Sardar Awais Ahmad Khan Leghari, APTMA Secretary General Shahid Sattar stated that the demand profile of distribution companies (Discos) and K-Electric over the past year clearly shows that peak demand now consistently occurs around midnight—contrary to the officially designated peak hours of 6:00 p.m. to 10:00 p.m. during March–May, and 7:00 p.m. to 11:00 p.m. during June–August.

According to APTMA, system demand continues to rise significantly even after the end of the official peak window, often exceeding 21,000 MW. This, the Association argued, demonstrates that there are no transmission constraints during these hours, suggesting that the higher peak-hours tariff acts as a deterrent to consumption within the designated window.

Incremental electricity package: APTMA submits recommendation to Leghari

“We believe this is resulting in suboptimal utilization of system capacity and is in fact suppressing consumption that would otherwise occur during this period,” APTMA stated.

The Association added that it, along with other industry bodies, has been advocating for a rationalization of the peak-hours tariff for several months.

“While we understand that a complete alignment of peak and off-peak tariffs may not be immediately feasible due to transmission and revenue constraints, there is a strong case for a more detailed, data-driven assessment by the Power Division,” Sattar emphasised.

APTMA suggested that a study be undertaken to determine the point at which higher fuel costs during peak hours are offset by the reduced per-unit capacity charges resulting from better utilization of stranded assets. At this equilibrium, the overall impact on the power tariff would be close to neutral—creating room for a new, economically justified peak-hours rate.

“By adopting such an approach, the Ministry could introduce differentiated peak pricing that incentivizes consumption among consumers with higher price elasticity, improving grid utilization without jeopardizing system stability,” the letter added.

The Association also highlighted the significant 8,000–10,000 MW difference between winter and summer demand, which not only reflects underutilized capacity during winter months but also presents a major opportunity.

“Since most capacity costs are already recovered through the existing tariff structure, there is a strong economic rationale for introducing a separate, substantially lower winter tariff—ideally based on marginal cost of generation. This would greatly incentivize industrial usage during the off-season, enhance system load factor, and distribute fixed costs more efficiently,” Sattar noted. APTMA urged the Power Division to re-examine the current peak-hours policy—not necessarily to abolish it entirely, but to align it more closely with actual grid demand dynamics. Such reform, it argued, would yield substantial benefits for both the power sector and consumers, particularly the industrial base, by maximizing the utilization of existing capacity.

“We stand ready to provide any technical assistance, data analysis, or modelling that the Power Division may require to support this evaluation and implementation process,” APTMA concluded.

Copyright Business Recorder, 2025