The National Electric Power Regulatory Authority (Nepra) announced on Thursday that a significant increase in electricity tariffs is expected in the coming months due to the Quarterly Tariff Adjustments (QTAs), as overall electricity consumption has decreased by 20%.

During a public hearing regarding a negative adjustment of 58 paisa per unit for August 2024, concerns about the drop in electricity consumption were raised by Nepra, the CPPA-G, and industrial representatives. However, the net effect of this negative adjustment will be 20 paisa per unit since the negative adjustment of 37 paisa from July 2024 will be offset in September 2024.

Dr. Fayyaz Chaudhry, Chairman of the NTDC Board, commented on the reasons for the decline in consumption, citing overcapacity in generation, inadequate transmission capacity, and the unplanned establishment of power plants in the south. He emphasized the need for an integrated approach to address the country’s electricity issues.

The hearing also discussed a Prior Year Adjustment (PYA) of Rs 15 billion, along with a more than 100% increase in tariffs for bagasse-based generation to align it with local coal prices. Industrialists Arif Bilwani and Aamir Shaikh argued that electricity consumption will not rise without incentives for the industry. Bilwani suggested that tariffs for peak and off-peak hours should be uniform throughout the day and called for special tariffs during holidays and for incremental demand.

Shaikh noted that industries are increasingly turning to solar and other cheaper energy sources like HSFO, which are more cost-effective than the national grid. He expressed concerns that the lower-than-expected negative Fuel Charge Adjustment (FCA) for August would lead to higher QTAs and proposed special incentives for industries.

Mathar Niaz Rana, Member (Tariff and Finance), indicated that rising electricity prices are a key factor in the 20% decline in overall demand, including industrial consumption. NEPRA Chairman Waseem Mukhtar acknowledged concerns about the decrease in electricity demand, stating that data on solar panel imports appeared unreliable.

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Member Sindh, Rafique Ahmad Shaikh, who has consistently highlighted the decline in electricity demand, pointed out that the main reason for reduced consumption is the closure of industrial units. He noted a 25% drop in electricity demand in August compared to the regulator’s projections.

Shaikh criticized the practice of penalizing consumers for the inefficiencies of distribution companies (Discos), arguing that the financial burdens of revenue shortfalls and bank loans are passed on to consumers. He stated that no comprehensive study has been conducted to investigate the reasons behind the consumption decline and rejected claims by the NPCC that August 2024 was an exceptionally wet and cool month affecting demand.

NPCC representative Wajid Chattha presented graphs to support the argument that significant weather variations were a key factor in the decline of consumption. Maqsood Anwar, a member from Khyber-Pakhtunkhwa, reiterated that industries are shutting down due to high electricity costs.