ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) has increased electricity tariffs for distribution companies (Discos) and K-Electric by Rs 1.6274 per unit to recover an additional Rs 14 billion under the Fuel Charges Adjustment (FCA) mechanism for January 2026.
The Authority conducted a public hearing on February 26, 2026. The Central Power Purchasing Agency–Guarantee (CPPA-G) had initially sought a positive adjustment of Rs 1.7814 per kWh for the month.
During the hearing, representatives of CPPA-G and the Independent System and Market Operator (ISMO) informed the Authority that K-3, Haveli Bahadur Shah, and Sahiwal coal power plants remained under full or partial forced outages during the month, while C-III was on scheduled outage.
READ MORE: Monthly FCA: Consumers of Discos & KE set to pay extra Rs18bn
It was further explained that January 2026 recorded the highest-ever demand for the month in terms of both average generation and peak demand. This necessitated the dispatch of residual fuel oil (RFO)-based power plants during peak hours to meet system requirements, contributing to higher fuel costs.
Regarding the impact of additional drawl by K-Electric, CPPA-G submitted that had KE not been supplied electricity from the National Grid, the cost for consumers would have increased by Rs 1.50 per kWh on account of FCA and Rs 2.38 per kWh on account of quarterly capacity purchase price adjustments — resulting in a cumulative increase of Rs 3.88 per kWh.
CPPA-G further explained that the additional drawl of more than 1,100 GWh required dispatch of marginal generation plants, thereby increasing FCA adjustments. However, the increase in overall sales is expected to improve capacity cost recovery, which may translate into favorable Quarterly Tariff Adjustments (QTAs) at the end of the relevant quarter.
During the hearing, a commentator, Rehan, argued that reducing reference rates during the January 2026 tariff rebasing had led to higher monthly FCAs. In response, the CEO of CPPA-G clarified that consumers benefited from lower electricity bills in January due to the reduced reference rate.
The subsequent FCA represents the differential amount recovered with a lag of approximately two months, allowing the cost impact to be distributed over time rather than recovered upfront through a higher base tariff.
Tanveer Bari and Aamir Sheikh raised similar concerns regarding the recent rebasing and the resulting positive periodic adjustments. CPPA-G reiterated that the additional drawl of over 1,100 GWh necessitated dispatch of marginal plants, contributing to higher FCA.
However, improved sales volumes are expected to support better capacity cost recovery, potentially resulting in favorable QTAs.
The revised FCA will apply to all consumer categories of KE and Discos, except lifeline consumers, Electric Vehicle Charging Stations (EVCS), and prepaid electricity consumers who have opted for the prepaid tariff.
The adjustment will also apply to consumers under the Incremental Consumption Package. Discos and KE will reflect the January 2026 FCA in the billing month of March 2026.
Copyright Business Recorder, 2026
Comments
Comments are closed for this article.