Govt Readies New Electricity Billing Model. The government is preparing a major overhaul of the electricity billing structure that could significantly impact non-solar consumers across Pakistan. The development came after the National Electric Power Regulatory Authority (NEPRA) concluded a detailed hearing on proposed revisions in electricity tariffs and fixed charges.
According to officials from the Power Division, the new restructuring plan is designed to reduce the financial burden on the industrial sector while revisiting the existing cross-subsidy mechanism among various consumer categories. However, the changes may result in increased costs for consumers who are not using solar energy systems.
NEPRA Hearing on Tariff Reforms
During the hearing, Power Division representatives presented a comprehensive plan to rationalise electricity tariffs. The primary objective of the proposed reforms is to create a more balanced distribution of subsidies and reduce the cost of electricity for industries, which officials say is currently among the highest in the region.
The hearing highlighted concerns about the growing financial pressure on large-scale consumers and the need to restructure the billing system to ensure long-term sustainability of the power sector.
Industrial Tariff Reduced by Rs. 4.4 Per Unit
One of the key announcements during the session was the reduction in industrial electricity tariffs. As per the proposed plan, the industrial tariff will be reduced by Rs. 4.4 per unit.
In addition, the long-standing Rs. 101 billion cross-subsidy burden currently borne by the industrial sector will be eliminated in the billing cycle. At present, industries contribute this amount to subsidise domestic consumers. Officials stated that removing this cross-subsidy is crucial for reviving industrial activity and improving competitiveness.
Cross-Subsidy Distribution Among Consumer Categories
Currently, the electricity pricing system relies heavily on cross-subsidies. The industrial sector contributes Rs. 101 billion annually to support domestic consumers. Similarly, commercial consumers contribute around Rs. 90 billion, while general services consumers bear approximately Rs. 35 billion in subsidy costs.
Officials revealed that consumers collectively shoulder a massive burden of over Rs. 614 billion in the form of tariff differential subsidies (TDS) and cross-subsidies. Moreover, large consumers face an additional Rs. 453 billion burden due to tariff differentials.
The Power Division emphasised that it is time to determine how this financial burden should be redistributed more fairly among different consumer groups.
Impact of Net Metering on the Power Sector
The issue of solar net metering was also discussed in detail during the NEPRA hearing. According to officials, net metering consumers generated around 35 billion units of electricity.
Authorities explained that if these consumers had remained fully dependent on the national grid, there would have been a difference of approximately Rs. 3 per unit in electricity costs. This factor has contributed to financial imbalances in the current tariff structure.
However, officials clarified that net metering itself is not being discouraged. They noted that the earlier decision to promote solar energy was taken during a period of severe energy shortages and was justified at that time.
Increase in Fixed Charges
Another significant change under the proposed billing model is the increase in fixed charges. Officials informed that fixed charges have been raised from 7 percent to 10 percent.
This adjustment is expected to affect consumers who are not benefiting from solar net metering systems. Higher fixed charges could result in increased monthly bills, particularly for non-solar users who rely entirely on grid electricity.
Surge in Protected Consumers
The hearing also revealed a substantial increase in the number of protected consumers. The number has surged from 9.4 million to over 21.5 million, partly due to the expansion of net metering and changing consumption patterns.
Protected consumers typically receive subsidised electricity rates. The rise in this category has further complicated the subsidy structure and increased financial pressure on other consumer groups.
Tariff Rationalisation to Revive Industry
Power Division officials stressed that tariff rationalisation is essential to revive Pakistan’s industrial sector. Currently, Pakistan’s industrial electricity tariff is considered one of the highest in the region, negatively affecting production costs and export competitiveness.
After restructuring, the industrial electricity rate is expected to fall to approximately 11.5 cents per unit, and further down to 10.5 cents per unit under a proposed three-year relief package.
Officials believe that lowering industrial tariffs will help stimulate economic growth, increase employment opportunities, and strengthen the country’s manufacturing base.
Government Stance on Solar Policy
Responding to concerns about recent changes in solar policy, officials maintained that the previous decision to promote net metering was not flawed. Instead, it was described as a necessary and positive step taken during a time of acute energy shortages.
Authorities clarified that solar energy adoption is not being discouraged. However, adjustments are being considered to ensure fairness in cost distribution between solar and non-solar consumers.
Conclusion
The government’s proposed electricity billing model represents a significant shift in Pakistan’s power sector policy. While the restructuring aims to reduce industrial electricity costs and improve economic competitiveness, non-solar consumers may face increased financial pressure due to revised cross-subsidy mechanisms and higher fixed charges.
