Domestic consumers: PD notifies fixed monthly charges

ISLAMABAD: The Power Division has issued a notification imposing fixed monthly charges on various categories of domestic consumers — up to Rs 675 per kW per month — in a move aimed at recovering Rs 101 billion and reducing the cross-subsidy of Rs 4.04 per kWh.

Protected consumers using up to 100 units per month have been exempted from the Rs 200 fixed charge.

However, under the new plan, a Rs200 fixed charge has been applied to about 9.9 million consumers using less than 200 units, while a Rs 300 charge will be imposed on over 6.1 million protected-category consumers using up to 200 units per month.

For non-protected consumers who exceed the 100-unit threshold even once within six months, a fixed charge of Rs 275 per kW will apply to around 5.7 million users. Their per-unit tariff will rise above Rs 22.44, excluding taxes.

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According to the notification available on the NEPRA website, consumers in the 200-unit slab will face a fixed monthly charge of Rs 300, affecting approximately 2.24 million users. The fixed charge will increase to Rs 350 for 2.9 million consumers using 201–300 units, while about one million consumers consuming 301–400 units will pay Rs 400 per month.

Around 400,000 consumers using 401–500 units will be charged Rs 500 per month, while those consuming more than 500 units will face the highest fixed charge of Rs 675 per kW per month.

NEPRA noted that the Power Division, in its submission, argued that there exists a structural misalignment between the determined revenue requirement of the power sector — a substantial portion of which comprises fixed costs — and the predominantly volumetric recovery mechanism under the current tariff structure.

The situation has been further compounded by the significant expansion of off-grid solar installations.

According to the Power Division, the existing volumetric tariff framework has placed a disproportionate recovery burden on certain consumer categories, leading to increased cross-subsidisation and migration toward alternative energy solutions.

Therefore, while remaining within the determined revenue requirement and approved subsidy limits, a recalibration of fixed and variable charges has been proposed to ensure equitable cost recovery and long-term financial sustainability of the grid.

Accordingly, fixed charges for all domestic consumers — except lifeline consumers — were introduced or revised.

The Authority observed that the current consumer-end tariff design is predominantly volumetric, with over 93 percent of the total system cost recovered on a per-unit (Rs/kWh) basis and only 7 percent through fixed charges (Rs/kW/month). In contrast, capacity payments to generation companies, NTDC/ HVDC costs and other transmission-related expenses are largely fixed in nature and must be paid irrespective of actual electricity consumption. These fixed costs constitute a significant portion of the total revenue requirement of distribution companies, resulting in a mismatch between cost incurrence (fixed) and cost recovery (consumption-based).

The National Electricity Plan (NE Plan) also provides that fixed charges should progressively be incorporated into tariffs of all consumer segments, accounting for at least 20 percent of fixed costs.

With the rapid penetration of rooftop solar and other renewable energy sources, grid-based electricity demand has been declining. This shift has necessitated a gradual transition from a volumetric tariff structure toward a more fixed-cost-oriented framework.

Accordingly, fixed charges ranging from Rs 200 per kW per month to Rs 675 per kW per month have been levied or revised for domestic consumers, other than lifeline consumers. For domestic consumers using more than 300 units and Time-of-Use (ToU) consumers, the increase in fixed charges has been offset by a corresponding reduction in variable charges.

The amount recovered through fixed charges has been utilised to reduce the existing cross-subsidy for industrial consumers. As a result, their variable tariff has been reduced by Rs 1 to Rs 4.58 per kWh across different categories.

Copyright Business Recorder, 2026