Nepra warns of higher costs amid 20pc drop in power sales

ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) has raised alarms over a 20 percent decline in electricity sales, warning that this drop could lead to increased capacity payments to independent power producers (IPPs) and place additional burden on consumers through quarterly tariff adjustments.

During a public hearing on the Central Power Purchasing Agency-Guarantee’s (CPPA-G) petition for monthly fuel charges adjustments for August 2024, Nepra was informed that solar panels with a cumulative capacity of 13,000 megawatts (MW) had been imported over the past seven months. The hearing was chaired by Nepra Chairman Waseem Mukhtar.

Total electricity generation in August 2023 was recorded at 15,959 gigawatt-hours (GWh), which dropped to 13,179 GWh in August 2024. CPPA-G officials also highlighted a 20.18 percent decrease in demand compared to projections, and a 17.42 percent year-over-year decline in electricity consumption. The maximum demand during August 2024 was 13,200 MW, while the minimum was 11,981 MW.

Nepra member Matthar Niaz Rana expressed concern over declining demand, particularly in the industrial and agricultural sectors, with up to a 27 percent decrease in the industrial sector alone. He attributed the demand drop in part to rising electricity prices.

“Despite the ongoing decline in electricity demand, the Power Division, CPPA-G, and DISCOs are still uncertain about the reasons for this trend,” said Rana, who noted that changes in weather patterns, rainfall and high tariffs have been cited, but no solid studies support these claims.

Nepra member Sindh, Rafiq Shaikh, echoed this concern, pointing out that many industries are shutting down due to expensive electricity. He emphasized the need for a study to identify the root causes of the decline in demand over the past five to six months. “If some relief is provided to the industry, electricity consumption could increase,” he said.

Nepra member from Khyber Pakhtunkhwa, Maqsood Anwar, added that industrial units are closing due to high electricity costs, further exacerbating the decline in demand. Officials from CPPA-G admitted that reduced industrial demand is alarming and that the lower demand will lead to higher quarterly adjustments, increasing the burden on consumers.

Rafiq Shaikh also noted that transmission constraints have prevented the Sahiwal Coal Power Plant from operating at full capacity, adding Rs5.3 billion in June, Rs4 billion in July and Rs1.5 billion in August to consumers’ bills.

“Consumers are being burdened because of NTDC’s failure to address transmission constraints,” Shaikh said, criticizing the National Transmission and Despatch Company for its inaction over the past four years.