NEPRA Increases Electricity Prices by Rs. 1.7 Per Unit – What You Need to Know

Recently, NEPRA (National Electric Power Regulatory Authority) made a decision that will affect the entire population of Pakistan. From September and November 2024, electricity prices are set to increase by Rs. 1.7 per unit. This news has caused concern among the public, as it adds to the growing financial strain due to inflation. Let’s take a closer look at the details of this announcement and how it will impact consumers.

NEPRA’s Rs. 1.743 Per Unit Increase in Electricity Prices

Starting in September 2024, NEPRA has approved a rise in electricity prices by Rs. 1.743 per unit. This increase will remain effective for the next three months, significantly impacting millions of Pakistani households. The purpose of this rise is to help power distribution companies, including K-Electric, recover approximately Rs. 43.23 billion through quarterly adjustments for the fiscal year 2023–2024.

This increase is yet another challenge for Pakistani citizens, who are already burdened by rising living costs and inflation. The new electricity rates will further strain household budgets as energy bills are expected to rise noticeably in the upcoming months.

Consumers Face Rs. 51 Billion Hike Due to Increased Costs

The additional cost to consumers due to this price hike will reach Rs. 51 billion. This significant sum includes capacity payments to independent power producers, operational costs, and losses in the transmission and distribution network. Consumers will also be impacted by an 18% General Sales Tax (GST) that is being imposed on the recovery amount.

Here are the main reasons for this increase:

• Rs. 7.3 billion will go towards paying market operator fees and system usage charges.
• Rs. 11.23 billion is needed to cover transmission and distribution losses.
• Rs. 3.5 billion will be used for operational and maintenance costs.
• The addition of the 18% GST will burden consumers by another Rs. 7.78 billion.

NEPRA Rejects Rs. 51 Million Legal Cost Request

In addition to the hike in electricity prices, NEPRA also considered a request from the Central Power Purchasing Agency (CPPA) to include Rs. 51 million in legal fees in the quarterly adjustments. However, NEPRA rejected this request. The reason given for this decision was that the Market Operation Fee (MOF) already includes Rs. 500 million allocated for legal fees for the fiscal year 2023–2024.

Here are the main reasons NEPRA rejected the legal fee request:

• The Market Operation Fee already covers legal fees.
• NEPRA does not consider additional legal fees necessary.
• Rs. 500 million is already allocated for legal expenses.

NEPRA Approves Rs. 43.23 Billion Adjustment

Despite rejecting the legal fee request, NEPRA has granted a positive adjustment of Rs. 43.23 billion. This adjustment covers a wide range of costs, including capacity charges, system usage fees, and operational costs. Additionally, NEPRA rejected a claim by the Kot Addu Power Company for Rs. 72.23 million in tax differentials and made a smaller adjustment for the Power Policy Implementation Board (PPIB) fee of Rs. 73.18 million.

These quarterly adjustments are intended to ensure the recovery of costs associated with running the country’s electricity grid. However, they also mean that consumers will bear the burden of these increased expenses.

What This Means for Households

The rise in electricity prices will significantly affect Pakistani households, many of whom are already struggling with high energy bills. The additional cost of Rs. 1.7 per unit, along with the 18% GST, will result in a significant increase in monthly electricity bills. The following points summarize how this change will impact consumers:

• Households will face higher electricity bills starting in September 2024.
• The total cost increase due to the price hike and additional taxes will reach Rs. 51 billion.
• Consumers will need to prepare for higher expenses in their energy budgets.

Conclusion

NEPRA’s decision to increase electricity rates by Rs. 1.7 per unit is a major change that will affect millions of people across Pakistan. This increase is due to rising operational costs, capacity payments, and taxes, which will result in a total burden of Rs. 51 billion for consumers. With these adjustments, the financial pressure on households is expected to grow, making it more challenging for people to manage their monthly energy bills.

Also Read: Bad News for Health Card Holders in Punjab Recent Update 2024

FAQs

Why has NEPRA increased electricity prices?
NEPRA has increased electricity prices to cover higher operational costs, transmission and distribution losses, and capacity payments. These costs also include an 18% General Sales Tax.

How much will electricity prices increase by?
Electricity prices will increase by Rs. 1.7 per unit starting in September 2024.

Will this increase affect all consumers in Pakistan?
Yes, this price hike will affect consumers across Pakistan, including those served by K-Electric and other distribution companies.

When will the price increase take effect?
The new electricity rates will take effect from September and November 2024.