Electricity bills to skyrocket as govt massively hikes tariff

ISLAMABAD  -  The federal government has approved a hike of up to 51 per cent in electricity base tariff for the residential consumers which will enhance the prices to up to Rs 57.63/unit for some consumers, from July 1, 2024.  

The federal government has submitted a motion to NEPRA requesting the regulator to implement a uniform tariff for consumers of Distribution Companies (DISCOs) and K-Electric. The NEPRA will hold a public hearing on the government’s motion on July 8.

The NEPRA had determined a hike of Rs 5.72/unit in electricity tariffs and now the federal government has brought a motion to the regulator to implement a uniform tariff for various categories of consumers of Distribution Companies (DISCOs) and K-Electric.

As per the base tariff approved by the Federal Cabinet for FY 2024-25, for the protected consumers using 1 to 100 units, 51% or 3.95/ unit hike in base tariff has been proposed, which will take the price from the existing Rs7.74/unit to 11.69/unit, for the protected consumers using 101-200 units a hike of 41% or Rs 4.10/unit has been proposed which will enhance the tariff from Rs 10.06/unit to Rs 14.16/unit.  

For the non-protected consumers using 1 to 100 units the tariff hike of Rs 7.11/unit (43%) has been proposed which will take the current per unit cost from Rs16.48/unit to Rs 23.59/unit. For the consumers using 101-200 the hike of Rs 7.15/unit (31%) has been proposed which will take the tariff for these categories of consumers from the existing Rs 22.95/unit to Rs 30.10/unit. For the consumers using 201-300 unit, the cost of one unit will go up by Rs 7.12/unit (26%) from the existing Rs 27.14/unit to 34.26/unit. For the consumers using 301-400 unit an increase of Rs 7.12/unit (22%) has been proposed which will take the existing price of Rs 32.03/unit to 39.15 per unit for these consumers. For the consumers using 401-500 units, 501-600 unit and 601-700 units the approved hike in tariff is Rs 6.12/unit which will take the price from the existing Rs35.24/unit, Rs 36.66/unit and Rs 37.80/unit to Rs 41.36/per unit, Rs 42.78/unit and Rs 43.92 respectively. For the consumers using above 700 a hike of Rs 6.12/unit (14%) has been proposed which will take the price from existing 42.72/unit to Rs 48.84/unit. After application of 18% GST the base tariff for the residential consumers using over 700 units per month will reach Rs 57.63/unit.

It is worth to note that after the applications of quarterly adjustments, monthly FCA’s, income tax, further tax and other taxes the tariff could go up to Rs 65 per unit for some consumers during 2024-25.

For the industrial B1 non-TOU consumers the tariff has been proposed to be Rs 37.68/unit for peak hours and Rs 31.20/unit in off-peak. For B2, B3 and B4 the tariff of TOU meters will be from Rs 29.11/ unit for off-peak and Rs 37.83/unit for peak hours. For agriculture tube wells the tariff will be Rs 29.85/ unit and Rs 30.89/unit respectively for off-peak and peak hours respectively.

NEPRA, in a public hearing notice, invited all stakeholders, interested parties, and the general public to participate in discussions on the federal government’s motion regarding consumer-end tariffs for DISCOs and K-Electric, as per the NEPRA Act, 1997, and NEPRA Tariff Rules, 1998.

“Once considered and approved, this will lead to the determination of a ‘Uniform Final Tariff’ for notification by the federal government, effective from July 1, 2024, superseding the existing tariff,” stated NEPRA.

The federal government has requested NEPRA to reconsider and issue a uniform tariff schedule for DISCOs and to modify K-Electric’s tariff to maintain uniformity across the country. This is aimed at recovering K-Electric’s revenue requirements as determined by NEPRA, considering proposed targeted subsidies and cross-subsidies.

NEPRA had earlier approved an increase of Rs 5.72/ unit for  DISCOs and K-Electric for FY 2024-25 which will take the national tariff average from the existing Rs 29.78 to Rs 35.50/unit.

It is relevant to note that following NEPRA’s approval, the federal government will issue a notification to implement the new tariff.

Meanwhile, Power Division, in a statement said the new electricity rates will be applicable from July 2024.The new electricity tariff will have little impact on most people’s monthly bills as the government will give a subsidy of Rs 440 billion for minimum increase in electricity bills.

According to Power Division, power price hike will be less than two percent for 16.8 million consumers, while the average increase for the more affluent 42 percent of consumers will be nine percent.

Similarly, electricity rates are expected to decrease as the economy improves, with an average reduction of three percent anticipated by January 2025 compared to June 2024, the statement said. Likewise, the fixed charges are necessary to cover 75 percent of the power sector’s fixed costs. Furthermore, the burden on the industrial sector has been reduced by Rs 150 billion to promote domestic industry. Additionally, the new electricity rates will be officially notified after the NEPRA hearing, according to the Power Division.