The National Electric Power Regulatory Authority (Nepra) has implemented a new electricity tariff system, introducing fixed monthly charges for all user categories starting July 1, 2024.
According to The News, Nepra has significantly raised fixed charges, with increases up to 300% for commercial users and up to 355% for industrial users. This strategy is designed to help distribution companies (Discos) increase their revenues through these fixed charges.
Here’s how the new structure affects different consumers:
- Residential Consumers: Those consuming between 301-400 units monthly will now pay Rs200, and this scale increases up to Rs1,000 for usage above 700 units.
- Time-of-Use Residential Consumers: A fixed charge of Rs1,000 per month applies, regardless of usage.
Commercial and Industrial Consumers:
- Commercial Users: Those with a load less than 5kW are set to pay Rs1,000 monthly, a jump from Rs500, marking a 300% increase. For loads of 5kW and above, the charge doubles to Rs2,000.
- Industrial Users: In the B1 category (up to 25kW under Time-of-Use metering), the fixed charge is Rs1,000. B2 category users (up to 500kW) will face a 300% increase, paying Rs2,000 instead of Rs500. B3 category (using 5,000kW) charges will see a 335% rise to Rs2,000 from Rs460, and B4 category consumers will also see a 355% increase, with new charges of Rs2,000 up from Rs440.
Currently, electricity cost structures include 72% fixed charges and 28% variable charges. However, fixed charges only contribute 2% to total revenue, with variable charges accounting for 98%. This significant gap has led to the new tariff design to better balance the cost and revenue streams.
Furthermore, the government plans to propose a uniform tariff for FY25 to Nepra. Nepra has already determined a base tariff increase for FY25 at Rs5.72 per unit. These changes in fixed charges are integral to this petition.
With the upcoming adjustments, the government-managed power sector anticipates generating over Rs3.763 trillion in revenue for FY25. For comparison, the base tariff for FY24 was Rs29.78 per unit, with an increase of Rs4.96 per unit. The projected new base tariff for FY25 is set to rise to Rs35.50 per unit.