Nepra cuts base KE charge from Rs 39.97 to Rs 32 per unit

• Nepra is reducing KE’s base tariff from Rs 39.97 per unit to Rs 32 per unit.
• The Regulator also sets performance benchmarks for a 7-year audit period.
• “The petitioners fail to persuade the authority to bring about the desired change.”

Dealing a blow to K-Electric’s finances, the National Electricity Regulatory Authority (Nepra) has reduced the utility’s multi-year base tariff from Rs 39.97 per unit to Rs 32 per unit after considering the government’s request regarding its earlier determination, The News reported on Tuesday.

However, the energy regulator maintained its previous position on key issues, rejecting the petition’s request to dismiss K-Electric’s Rs50 billion write-off claims. Nepra noted that it had already approved the deletion in a previous decision and saw no reason to overturn that determination.

“The petitioners have failed to persuade the Authority to effect the desired modification or reconsideration; therefore, the reconsideration motions are accordingly dismissed,” Nepra said in its decision.

The tariff revision marks a sharp reversal from Nepra’s May 27, 2025 determination, which had raised KE’s average base tariff by Rs 6.15 per unit – an 18.18% increase – to Rs 39.97 per unit for FY2023-24.

The July 18, 2025 notification had formalized the multi-year tariff for supply, distribution and transmission works till FY 2030.

The Power Division had challenged these decisions and filed a review petition before Nepra, which recently conducted closed-door hearings on the petitions. Despite these approvals, K-Electric’s financial prospects remain bleak.

The company’s account recovery rate fell to 91.5% in FY2023-24 and is expected to fall further to 90.5% next year – potentially resulting in under-recovery of nearly Rs 97 billion in two years.

Nepra has already warned that KE’s Rs21.6 billion allowable return on distribution work could be wiped out without government support or tariff adjustments.

Under the latest decision, the regulator also set new performance benchmarks for the seven-year review period, approving a carry loss target of 0.75% per annum — up from 0.86% in FY2023-24 — capped at 1%.

Tariff adjustments will reflect annual performance, rewarding improved performance.

For distribution, Nepra has approved a total loss target of 9% — which includes 8% technical losses and 1% compensation for law and order issues, based on the PITCO Fitchner study.

This is expected to gradually decline to 8.03% by 2029-30, with technical losses shrinking to 7.03%.

The existing 75:25 sharing mechanism for outperformance will remain in place — meaning 75% of any efficiency gains will benefit consumers, while KE will retain 25% as an incentive.

Nepra also confirmed its decision to use Pakistan’s National Consumer Price Index (N-CPI) for fuel cost adjustments instead of the US CPI, aligning tariff adjustments with domestic inflation trends to improve transparency and consistency.