UoSC determination: KATI urges Nepra to ensure legal consistency

ISLAMABAD: The Korangi Association of Trade and Industry (KATI) has urged the National Electric Power Regulatory Authority (Nepra) to ensure transparency and legal consistency in its forthcoming determination on Use of System Charges (UoSC), warning against inclusion of unjustified costs and absence of clarity on key parameters.

In its post-hearing comments submitted to the Nepra following the UoSC hearing held on June 11, 2026, the KATI raised serious concerns over the proposed framework, particularly the non-disclosure of uniform Transmission and Distribution (T&D) loss benchmarks and inclusion of charges not part of the federal government’s motion.

The KATI noted that the government’s motion explicitly called for determination of uniform T&D loss benchmarks in line with the Market Commercial Code. However, during proceedings, neither Disco-wise approved loss levels nor the methodology for deriving uniform benchmarks across voltage levels were shared with stakeholders.

The Association argued that determination of UoSC without simultaneously notifying T&D loss benchmarks would create significant uncertainty for wheeling consumers and prospective market participants, as loss assumptions are critical for financial modelling and commercial viability.

The KATI urged the Authority to either determine and notify uniform T&D loss benchmarks as part of the current proceedings or conduct a separate hearing before finalising them. It also called for disclosure of the financial impact of proposed loss factors to enable informed decision-making by market participants.

On the issue of surcharges, the KATI strongly opposed inclusion of Debt Servicing Surcharge (DSS) of Rs 3.23 per unit, stating that it was neither part of the Federal Government’s motion nor legally justified within the current proceedings. Imposition of such a charge, it maintained, would be ultra vires and should be explicitly excluded from the determination.

The Association further raised concerns over the inclusion of cross-subsidy in UoSC for industrial consumers (B3 and B4 categories), arguing that it contradicts the government’s February 2026 decision to eliminate cross-subsidy from industrial tariffs.

According to the KATI, embedding cross-subsidy within UoSC would effectively re-impose the same burden through an alternative mechanism, undermining the government’s reform agenda and rendering wheeling commercially unattractive for industrial consumers.

The KATI emphasised that UoSC and T&D losses are network-related costs attributable to distribution companies and should be applied uniformly and transparently across all consumers to ensure a level playing field between regulated and open-access users.

The Association requested the Nepra to address these concerns in its final determination to ensure that the UoSC framework remains legally sound, commercially viable and aligned with the government’s broader market liberalisation objectives.

Copyright Business Recorder, 2026