NEPRA refuses any relief to MEPCO in Review Motion

ISLAMABAD: The National Electric Power Regulatory Authority (NEPRA) has rejected Review Motion filed by Multan Electric Power Company (MEPCO) against determination of Multi Year Tariff (MYT) for 2025-26 to 2029-30.
The Authority determined Multi Year Tariffs of MEPCO for a period of five years i.e. from FY 2025-26 to FY 2029-30, separately for its power distribution and supply functions, vide tariff determinations issued on January 7, 2026. The tariffs so determined were notified by the Federal Government vide SRO dated 13 January 2026.
The Petitioner being aggrieved with the Impugned Determinations, filed Motions for Leave for Review (MLRs), which were considered and admitted by the Authority. To proceed further in the matter, the Authority decided to conduct a hearing in the matter. A notice of hearing was accordingly issued to the Petitioner, informing about the hearing date and to present its case before the Authority. Notices of hearing were also issued to Ministry of Energy — Power Division (MoE-PD), Independent System and Market Operator (ISMO), Power Planning and Monitoring Company (PPMC) and Central Power Purchasing Agency Guarantee Limited (CPPAGL). The hearing was held on March 5, 2026.
MEPCO, in its MLRs and during the hearing, contested the following areas: (i) insufficient investments allowed for FY 2025-26 & FY 2026-27 ;(ii) O&M expenses; and (iii) mismatch of revenue requirement with the investment and T&D losses.
While MEPCO filed separate MLRs against distribution and supply tariff determinations, the issues/ contentions raised in both MLRs are found to be similar, hence, the Authority has deemed it appropriate to address both MLRs through the instant decision.
The brief of the submissions of MEPCO in its MLRs and as presented during the hearing, along with the discussions, followed by the decision of the Authority on each point are given in the following paragraphs.
MEPCO submitted that it had timely filed its Distribution Investment Plan (“DIP”) for the MYT control period (FY 2025-26 to FY 2029-30); however, despite the hearing being conducted on the DIP, the Authority through the Impugned Determination has provisionally approved significantly lower figures, whereby the investments related to major technological interventions were not approved. The Petitioner contended that the approved investment level is grossly insufficient to meet MEPCO’s operational, financial and system expansion requirements, particularly considering the size of its network and consumer base.
MEPCO emphasized that it had demonstrated significant operational improvement during 1W 2024-25 by reducing T&D losses from 15.2% to 13.3%, resulting in savings of approximately 358 GWh and financial gains of around Rs. 9.8 billion. Similarly, recovery performance improved from 98.62% to 100.5 1%, yielding additional financial benefits of approximately Rs.11.8 billion. Overall, these efficiency improvements generated cumulative financial gains of approximately P.s. 21.6 billion during the year. The Petitioner submitted that, in order to sustain and further improve this performance, it proposed a revised DIP amounting to Ps. 115.463 billion, later revised to Ps. 119.022 billion, for the five-year period from FY 2025-26 to FY 2029-30, covering critical investments in system strengthening, HT/LT rehabilitation, augmentation of distribution transformers, .AMI deployment, APMS installations, ERP systems, Data Center establishment, GIS mapping, scanning meters, safety improvements and anti-theft measures. MEPCO explained that these initiatives are aimed at reducing technical and commercial losses, improving reliability, enhancing outage management, enabling data-driven decision-making and supporting digital transformation in line with Government policy and the Authority’s own directions.
In particular, the Petitioner highlighted that the proposed investments of Rs. 41.7 billion for replacement of defective meters, Rs. 11.96 billion for APMS deployment, Rs. 7.07 billion for AMI expansion and Rs. 3.77 billion for establishment of a centralized Data Center were essential to modernize operations and improve transparency, accountability and customer service. MEPCO further submitted that the Authority, despite earlier directions regarding AMR/AMI deployment and digitization initiatives, did not allow any Capex for the abovementioned technological interventions. The Petitioner argued that these projects are not discretionary expenditures but form part of ongoing reform initiatives supported by the Government of Pakistan as well as international development partners including the World Bank and ADE.
MEPCO explained that foreign funded projects are already at advanced stages of execution, with contractual commitments and procurement activities underway, and any discontinuation or delay would expose the utility to commitment charges, financial losses, reputational damage and possible disruption of donor-funded programs. It was additionally submitted that under World Bank-funded schemes, use of old/spare power transformers is expressly disallowed by the donor agency, necessitating additional investment of approximately Rs. 3.56 billion.
The Petitioner also highlighted that the investment levels allowed to MEPCO are significantly lower than those approved for other DISCOs despite MEPCO serving relatively higher consumer base (approximately 8.8 million consumers) and demonstrating comparatively better operational performance. It was pointed out that K-Electric was allowed investment of approximately Rs. 132.3 billion, IESCO Rs. 38.9 billion, FESCO Rs. 30.1 billion, LESCO Rs. 26.7 billion and GEPCO Rs. 24.1 billion for comparable periods, whereas MEPCO was allowed only Rs. 18.9 billion. MEPCO contended that such disparity is inconsistent with the principles of performance-based regulation, equity and regulatory fairness, particularly when the utility has achieved measurable improvements in loss reduction and recovery performance.
The Petitioner further submitted that recent floods in its service territory caused extensive damage, including replacement requirements for more than 60,000 defective meters, and requested that the Authority allow a “Z-Factor” mechanism to account for extraordinary expenditures arising from natural calamities and other uncontrollable events.
MEPCO submitted that, in the Impugned Determination, provisional CAPEX/investment and T&D loss targets have been allowed on a financial year basis for FY 2025-26 and FY 2026-27, whereas the corresponding revenue requirement has been determined on a calendar year basis, i.e., for CV 2026, without clearly specifying the applicable cut-off values or the basis adopted for rebasing from FY to CY. MEPCO contended that due to this mismatch in timelines and reporting basis, practical difficulties may arise in correlating the allowed revenue requirement with the approved investment levels, T&D loss targets, and audited financial statements, which are all maintained and reported on a FY basis. Accordingly, MEPCO requested that necessary clarity and correlation may be provided regarding the rebasing methodology adopted for determining the revenue requirement on a CV basis vis-à-vis the approved parameters determined on a FY basis.
Regarding the clarity or correlation between the revenue requirement for the CY and the allowed investment and T&D loss targets determined on a FY basis, it is noted that the Petitioner itself had requested the rebasing of consumer-end tariff for CV 2026. Therefore, seeking such clarification at this stage raises concerns regarding the Petitioner’s understanding of the matter. Notwithstanding the above, and in order to address the Petitioner’s concerns, the Authority has decided to conduct a session with all DISCOs to explain the methodology adopted for tariff assessment on a CV basis, along with outlining future data requirements for necessary adjustments.
In view of the foregoing discussion, the Authority has found no justification to review the Impugned Determinations; accordingly, the instant review motions filed by the Petitioner are hereby declined. The decision of the Authority is intimated to the Federal Government for notification in the official Gazette under Section 3 1(7) of the NEPRA Act.