NEPRA cites legal gaps in uniform FCA plan for KE and DISCOs

ISLAMABAD: National Electric Power Regulatory Authority (NEPRA) has questioned Power Division that whether subsidy or cross subsidy against determined tariff for KE consumers will be assessed on annual basis, or monthly or quarterly basis, sources close to Registrar Wasim Anwar Bhinder told Newzshewz.
Offering comments on Power Division’s summary titled “application fuel charges adjustment across the country” approved by the ECC on August 19, 2025, depriving KE consumers from previous financial benefit of billions of rupees on account of May and June 2025, NEPRA has clarified that neither the NEPRA Act nor the National Electricity Policy 2021 explicitly mandates a uniform Fuel Charges Adjustment (FCA) mechanism. FCA, by its nature, is a cost-reflective adjustment tied to the actual fuel cost variation incurred by a licensee for energy procurement.
According to NEPRA, presently, the national power sector operates under a dual cost basket structure. DISCOs, procuring power from the centralized CPPA-G pool under the Single Buyer regime. K-Electric, a vertically integrated utility with its own generation, transmission and distribution setup, partially interconnected with the national grid. This structural separation necessitates separate FCA determinations, as the underlying fuel mix, procurement sources, and operation costs differ materially between the two baskets.
The power sector Regulator is of the view that despite all this, it has previously adopted a uniform approach to Quarterly Tariff Adjustments (QTAs) for KE and DISCOs, driven by policy consideration and Federal Government directives.
“Without prejudice to NEPRA’s core mandate of cost-reflective tariff setting, the Authority is guided by Section 31(7) of the NEPRA Act, which permits reliance on Federal Government policy and guidelines and as per Section 14(5), the Authority shall perform its functions in accordance with the National Electricity Policy,” said Registrar NEPRA.
However, the Regulator is of considered view that for legal and procedural propriety, the following points must be observed ;(i) FCA for KE and DISCOs continue to be independently determined based on their respective fuel cost data and generation mix, to preserve regulatory transparency and compliance with cost-reflectivity principles ;(ii) the uniformity at the consumer-end, as proposed by the Ministry, may be achieved through policy-driven alignment of the notified FCAs through following;(a) FCA determinations for KE and XWDISCOS remain separate ; and (b) any uniform application is driven by policy and supported through subsidies/cross-subsidies in accordance with National Electricity Policy.
“Without prejudice, it is not clear from the summary, whether subsidy or cross subsidy against determined tariff for KE consumers will be assessed on annual basis, or monthly or quarterly basis,” Registrar NEPRA maintained. Ends