July 2026 FCA: Power tariff may rise by Rs2.50/unit for Rs34bn recovery

ISLAMABAD: The government is likely to increase electricity tariff by around Rs2.50 per unit for July 2026 to recover over Rs34 billion from consumers of Discos and K-Electric under the monthly Fuel Charges Adjustment (FCA) mechanism, sources told Business Recorder.

The main reason for the higher positive FCA for July 2026 is higher electricity consumption during the month, coupled with the use of expensive fuels, including LNG purchased from the spot market and furnace oil to meet peak-hour demand.

The National Electric Power Regulatory Authority (Nepra) recently approved a positive adjustment of Re0.7503 per unit for June 2026, against a request of Rs1.20 per unit by the Central Power Purchasing Agency-Guaranteed (CPPA-G).

READ MORE: August power bills: Nepra increases FCA to generate additional Rs9.8bn

The costs arising from various factors to be claimed by CPPA-G in its FCA request will also be accounted for by Nepra. Separate FCAs for each Disco will subsequently be worked out after accounting for energy procured from CPPA-G, bilateral contracts with SPPs/CPPs and net-metering arrangements within the respective basket of each Disco.

The expected increase comes at a time when the country’s industrial sector is already facing high energy costs and exporters are under pressure because of the deteriorating situation in the Middle East.

During a recent discussion, the authority expressed concern over partial-loading charges of around Rs4.9 billion and sought CPPA-G’s strategy to minimise these costs.

CPPA-G explained that the charges were not attributable to operational inefficiencies but had resulted from reduced daytime electricity demand due to increased rooftop solar generation. Power plants had to operate at partial load during solar hours and were subsequently ramped up to meet the increase in grid demand during evening hours.

CPPA-G assured the authority that efforts would be made to minimise partial-loading charges. The authority noted that such charges in June 2026 were approximately Rs1 billion higher than those recorded in June 2025.

The Independent System and Market Operator (ISMO) added that shutting down power plants to avoid partial-loading charges would instead result in significant start-up costs.

Amir Sheikh, a leading textile exporter, urged the government to remove the levy on high-speed/furnace oil (HFO) so that HFO-based plants could be utilised instead of costly RLNG-based plants. He also proposed that the FCA mechanism surcharge should be calculated on the basis of prospective electricity units, similar to the mechanism used for quarterly tariff adjustments (QTA).

Rehan Javed expressed concern over declining electricity demand and its potential impact on quarterly tariff adjustments.

According to the Ministry of Energy (Power Division), electricity demand had declined primarily because of the growing number of net-metering consumers. However, it clarified that the impact on quarterly tariff adjustments would not be as significant as anticipated by industrial consumers.

The Power Division further stated that electricity demand was being managed to avoid reliance on expensive RLNG spot cargoes, which otherwise could push up electricity prices during the summer months.

Copyright Business Recorder, 2026