ISLAMABAD: With a five per cent decrease in power consumption in July over last year, the public sector distribution companies (Discos) have sought a Rs1.69 per unit refund for consumers due to lower fuel costs, driven by better hydrological conditions.

If approved, the refund could amount to approximately Rs23 billion, which would be reflected in August bills.

The National Electric Power Regulatory Authority (Nepra) has scheduled a public hearing on Aug 28 to review the petition. The fuel cost adjustment (FCA) refund will also apply to K-Electric consumers, in line with a recent decision by the Economic Coordination Committee (ECC) of the cabinet.

Nepra has also sought public feedback on whether the Power Division’s request to implement the ECC’s decision before formal cabinet ratification should be accepted. This will determine how the FCA is applied to K-Electric’s consumers and ensure uniformity across the country’s power tariffs.

Power consumption falls 5pc in first month of FY26

As per the ECC’s directive, Nepra is required to implement the same tariff rationalisation for K-Electric consumers as for those of the Discos. Any disparity between K-Electric’s FCA and the official rate will be adjusted through subsidies or cross-subsidies. The uniform FCA, applicable from June 2025, will be reflected in bills issued in August 2025. Nepra has already notified a negative fuel adjustment of 78 paise per unit, payable by consumers in the current billing cycle.

The Central Power Purchasing Agency (CPPA), which filed the petition for the July FCA, reported that power consumption in July was 5pc lower than the same month last year but 2.6pc higher than June 2025. The total electricity delivered to Discos was 13,666 gigawatt hours (GWh) in July, up from 13,310 GWh in June but down from 14,410 GWh in July 2024.

The CPPA revealed that the average fuel cost for electricity generation was Rs8.18 per unit in July, compared to Rs9.04 per unit in the same month last year. The reference fuel cost was initially set at Rs9.88 per unit.

According to the CPPA, 14,123 GWh of electricity was generated in July for Rs109.90 billion (Rs7.78 per unit). Of this, 13,666 GWh was delivered to Discos, with a total expenditure of Rs111.86 billion (Rs8.18 per unit).

Hydropower remained the dominant source of electricity, contributing 40pc of the total generation in July, up from 36pc in the same month last year. Other major contributors included RLNG (17.3pc), local coal (10.64pc), nuclear power (10pc), and imported coal (8pc). Domestic natural gas accounted for 7.74pc of the energy mix.

RLNG-based generation was the most expensive, with a cost of Rs22 per unit, followed by imported coal (Rs14.49 per unit) and local gas (Rs13.38 per unit). Local coal was cheaper, at Rs11.34 per unit, while furnace oil-based generation cost Rs31 per unit, but contributed less than 1pc to the grid.

Nuclear energy cost Rs2.42 per unit in July, up from Rs1.48 per unit last year. Renewable sources, including wind and solar, contributed 4.8pc to the grid, with no fuel cost. Electricity imports from Iran made up about 0.25pc of the total supply, costing Rs24.15 per unit, a slight increase from Rs22.5 per unit in June and Rs25 per unit in July 2024.

The FCA is reviewed monthly, and adj­ustments are passed on to consumers thr­ough their bills for the corresponding mon­­th. The mechanism allows for chan­ges in fuel costs to be automatically adj­us­ted in consumers’ bills, while quarte­r­ly tariff adjustments account for variations in power purchase prices, capacity char­ges, and transmission and distribution losses, all of which are factored into the base tariff by the federal government.

Published in Dawn, August 22nd, 2025