In a major regulatory development, K-Electric (KE) has announced that its average power tariff has been reduced by Rs7.6 per unit following the National Electric Power Regulatory Authority (Nepra)’s decision on a series of review motions.
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According to KE, Nepra’s revised determination brings down its average tariff from Rs39.97/kWh to Rs32.37/kWh, marking one of the largest downward revisions in recent years. The company, however, clarified that this KE Nepra tariff reduction does not apply to consumer bills, meaning there will be no immediate decrease in monthly electricity charges for customers.
Nepra’s decision and its impact:
Nepra’s latest notification covers multiple areas of KE’s operations, including its multi-year tariff (MYT) for FY 2024–2030, generation and distribution costs, investment plans, and loss assessments. The regulator also reviewed the company’s previous write-off claims from FY 2017–2023 but upheld its earlier stance.
While the downward revision of the average tariff may appear favorable, KE said the decision could have “far-reaching consequences for stakeholders, including consumers,” and may impact the company’s financial sustainability. The utility added that it is reviewing Nepra’s order in detail and will exercise all available legal remedies under the law.
Background of the tariff review:
Earlier this year, on May 27, Nepra had set KE’s base tariff at Rs39.97/kWh for FY 2023–24 — nearly 40 percent higher than the national average tariff of about Rs28 per unit applied to the ten public-sector power distribution companies (Discos). The difference between KE’s tariff and that of the Discos was covered through the federal government’s tariff differential subsidy, placing an additional burden on taxpayers.
Multiple stakeholders, including consumer groups and policy experts, filed review petitions challenging the steep tariff, prompting Nepra to reassess the determination.
Key elements of Nepra’s revised notification:
- Nepra revised the reference fuel cost and power purchase price for FY 2023–24.
- The authority directed KE to file new fuel cost adjustment claims for the same fiscal year.
- The regulator refused to allow upfront recovery losses, emphasizing that inefficiencies should not be passed to consumers or the national exchequer.
- Nepra maintained its earlier decisions on issues like operation and maintenance costs, late payment surcharge, and tariff control period (FY 2024–2030).
Nepra noted that the financial burden of reduced recovery targets could otherwise have reached Rs200 billion over the control period — a cost that would ultimately fall on the federal budget through subsidies.
KE’s response:
K-Electric stated that while it respects the authority’s decision, the KE Nepra tariff reduction was “not reflective of the utility’s cost realities” and could impact future investment and infrastructure upgrades.
“Nepra’s revised determination significantly alters previous calculations and will have long-term implications for KE’s sustainability. We are reviewing the decision and will take necessary steps under the law,” the company said in a press release.
What this means for consumers:
Despite headlines about a Rs7.6 per unit reduction, this adjustment is accounting-based and applies to KE’s internal tariff structure — not to consumer bills. Residents of Karachi will not see any decrease in their monthly electricity payments until further regulatory notifications or government directives are issued.
