Power Division Projects Rs2.56 a Unit Added to November Electricity Bills

Electricity bills are projected to carry an extra Rs2.56 per unit in November, the Power Division has said, as the fuel cost adjustment for September generation works its way through Pakistan's monthly billing cycle.

The ministry's estimate, reported by Dawn, puts the total cost to consumers at roughly Rs32.7 billion. The adjustment still requires a formal determination from the National Electric Power Regulatory Authority (NEPRA) before it is added to bills, a step that has previously trimmed the amounts utilities first sought.

Why fuel costs keep moving

The Power Division attributed the rise to expensive fuel used for power generation, as international prices climbed amid Middle East conflict and the disruption that followed the closure of the Strait of Hormuz. Qatar's declaration of force majeure on its LNG supply contracts added further strain, pushing Pakistan to seek additional spot cargoes even as it continued pursuing its existing contracted volumes.

August's fuel cost adjustment, which appeared on October bills, came in at Rs1.1086 per unit after NEPRA cut CPPA-G's original request of Rs1.7267. September's estimate is roughly Rs1.45 higher than August's, which is how the Power Division arrives at the Rs2.56 total for November.

The load-shedding trade-off

The ministry said targeted load shedding, lasting two to two-and-a-half hours a day during September, reduced the need for costlier furnace oil and high-speed diesel generation. Combined with using imported RLNG at domestic gas prices, it said the measures saved consumers up to Rs3.44 per unit, averting what it described as a potential Rs5-6 per unit increase.

That trade-off echoes the pattern this year, when furnace oil sales jumped 740 percent year-on-year in September as the same Hormuz-linked LNG disruption forced generators onto more expensive fuel.

A tariff structure already under dispute

The Power Division said fuel cost adjustments and quarterly tariff revisions combined added only 65 paisa per unit, a 1.9 percent rise over the base tariff, between January and August. But the relief has not satisfied industrial consumers, who dispute the benefits of a separate incremental support package. They argue that a Rs22.96 per unit marginal rate benefits only a narrow group, while the real marginal cost of Rs34 per unit adds about Rs11 per unit to what all consumers pay on average. NEPRA held a public hearing on the package last week, with a decision still pending, and the regulator has separately been weighing a related industrial tariff dispute worth Rs26.8 billion that producers have raised with the Federation of Pakistan Chambers of Commerce and Industry.

What to watch

NEPRA has not yet issued its own determination on the September fuel cost adjustment, and its past rulings have sometimes reduced the amount DISCOs requested. In August's cycle, for instance, the regulator cut the Central Power Purchasing Agency-Guaranteed's (CPPA-G) request by more than a third before settling on Rs1.1086 per unit. Whether a similar reduction applies to the September adjustment will only be clear once NEPRA holds its own public hearing and issues a decision, expected before November bills are issued.

Households already paying higher bills from the daily swings in petrol and diesel prices, tracked on our live fuel price page, now face a second source of monthly cost uncertainty in the fuel cost adjustment, which depends on international fuel markets that have moved sharply since the Strait of Hormuz disruptions began earlier this year.

Build Better Pakistan's Energy Desk tracks NEPRA's monthly fuel cost adjustments and will update this piece once the regulator issues its determination.