In a major setback for K-Electric, the National Electric Power Regulatory Authority (Nepra) has reduced the company’s multi-year base tariff from Rs39.97 per unit to Rs32 per unit after reviewing the government’s petition on its earlier decision, according to a report.
Despite the revision, Nepra maintained its earlier position on several key matters, turning down the request to reject K-Electric’s Rs50 billion write-off claims. The regulator noted that the write-offs had already been approved and there was no justification to reverse that decision.
“The Petitioners have failed to convince the Authority to bring desired alteration or review; thus, the review motions are accordingly dismissed,” Nepra stated in its verdict.
This adjustment comes as a reversal of Nepra’s earlier determination issued on May 27, 2025, which had increased K-Electric’s base tariff by Rs6.15 per unit to Rs39.97 for FY2023-24, an 18.18% rise.
The final notification, issued on July 18, 2025, confirmed the long-pending multi-year tariff for power supply, distribution, and transmission up to FY2030.
The Power Division later challenged the decision, filing a review petition that prompted Nepra to hold closed-door hearings. However, despite the tariff revision, K-Electric’s financial health remains strained.
The utility’s bill recovery rate dropped to 91.5% in FY2023-24 and is expected to fall further to 90.5% next year, leading to potential losses of nearly Rs97 billion over two years.
Nepra has also warned that KE’s approved Rs21.6 billion return on distribution operations could be wiped out without government intervention or tariff adjustments.
In its latest decision, the regulator introduced new efficiency benchmarks for the seven-year control period.
It set the transmission loss target at 0.75% annually, lower than the previous 0.86%, with an upper limit of 1%. Annual tariff adjustments will now depend on performance, rewarding operational improvements.
For distribution, Nepra approved a 9% total loss target, including 8% technical losses and 1% due to law and order challenges, based on the PITCO Fitchner study. This is expected to gradually fall to 8.03% by FY2029-30, with technical losses reduced to 7.03%.
The existing 75:25 mechanism for sharing efficiency gains will remain unchanged, giving 75% of the benefit to consumers and allowing K-Electric to retain 25% as an incentive.
Additionally, Nepra reaffirmed that Pakistan’s National Consumer Price Index (N-CPI) will continue to be used for fuel cost indexation instead of the US CPI, aligning tariff adjustments with domestic inflation to enhance clarity and consistency.