ISLAMABAD: National Electric Power Regulatory Authority (NEPRA) on Monday night issued determinations on the Review Motions filed against its earlier decisions regarding generation, transmission, supply tariffs, and write-off claims of K-Electric (KE).
According to the new determinations, NEPRA has upheld its previous decision on KE’s write-off claims amounting to Rs 50 billion, stating that the Authority “finds no reason to modify or alter the impugned decision.”
However, the regulator has made amendments in certain aspects of its earlier determinations related to transmission, generation, and supply tariffs. The Review Motions were filed by the Power Division, Tanveer Barry, Arif Bilwani, Syed Hafeez Uddin (MNA), and Jamaat-e-Islami Karachi.
With the implementation of revised calculations and assumptions on different accounts , KE’s consumer -end tariff is estimated to decline by Rs 4–5 per kWh. The Authority stated that it had carefully reviewed submissions from KE, stakeholders, and the Ministry of Energy (Power Division). It noted that control periods under tariff determinations are a regulatory construct, distinct from the licensed operational life of a generation facility. While Independent Power Producers (IPPs) may receive tariffs for the full life of a plant, KE — as a vertically integrated utility operating under a multi-source portfolio — remains subject to evolving system requirements, interconnection capacity, and national least-cost dispatch objectives.
NEPRA observed that with the completion of the KKI/NKI interconnection and enhanced grid access exceeding 2,000 MW, KE is expected to rely progressively on lower-cost national generation. Accordingly, periodic reassessment of the thermal fleet’s economics is essential to protect consumers from avoidable capacity payments on underutilized assets.
The Authority further noted that KE has formally initiated the decommissioning of SGEPS and KTGEPS due to fuel constraints and declining dispatch. In light of these developments, NEPRA has decided to discontinue the tariffs for KTGEPS and SGEPS effective September 23, 2025, as disclosed by KE to the Pakistan Stock Exchange.
Additionally, considering the Power Division’s submissions, NEPRA has decided to discontinue the tariffs of BQPS-I and KCCP from the date of notification of the decision in the official Gazette. The Power Division has been directed to ensure that the termination of these plants does not affect KE’s power supply situation. In case of disposal of the four terminated/retired plants, any gain or loss shall be adjusted as per Para 26.2 of the impugned determination, provided that disposal is conducted through transparent and competitive arm’s-length transactions.
NEPRA has also maintained its earlier decision regarding the control period of BQPS-II and BQPS-III. In determining the final allowed figures, NEPRA analyzed KE’s request in detail, comparing it with historical costs over the preceding seven years and benchmarking it against costs allowed to other comparable plants of similar size and technology. The Authority approved the lowest of these figures, thereby significantly reducing the allowed operations and maintenance (O&M) costs.
The Power Division did not provide justification or concrete evidence to support its request to change the indexation mechanism; therefore, it was not considered. Moreover, NEPRA noted that a sharing mechanism already exists — if the actual O&M cost is lower than th e allowed indexed O&M, the benefit will be shared between consumers and KE in a 60:40 ratio. Accordingly, the Authority decided to maintain its earlier position.
Regarding the Distribution Investment Plan and Losses Assessment for the MYT tariff control period from FY 2023–24 to FY 2029–30, KE has been directed to conduct a thorough needs assessment of all projects on a regular basis for the remaining five years, considering prevailing ground realities. For this assessment, KE must engage a third-party firm.
Based on this review, KE shall submit a report — validated and recommended by the third-party firm — outlining the projects it plans to execute in the coming year and any rescheduling requests. The report must be submitted prior to the start of each financial year, ideally by early March.
NEPRA has provisionally allowed the requested land and Right of Way (RoW) costs, which will be subject to downward adjustment based on verified evidence of land purchases for grid stations and RoW compensation payments made by KE, to the satisfaction of the Authority.
Based on the information provided by KE, whereby the average MDI works out as 2,684 MW, the Use of System Charge has been worked out as Rs.l,195/kW/month. the revised Revenue requirement of the Petitioner for its transmission function for the FY 2023-24 has been worked at Rs 38.391 billion.
On MYT adjustments/ true up for the FY 2023-24, NEPRA has decided that based on the information provided by KE, adjustments under different heads have been worked out for incorporation in the already determined tariff as part of the review motion. As the audited accounts are still pending publication, these adjustments would still be on provisional basis, subject to further adjustments in accordance with the MYT mechanisms once the audited accounts become available.
As per the FCA decision impact of negative FCA (earlier determined for FY 2023-24), is not to be passed on to Life Line, residential consumer consuming upto 300 units and Agriculture consumers. However, Positive FCA is not passed on to Life Line consumers only. The impact of FCA retained by KE to be adjusted as part of PYA works out as Negative amount of Rs. 1,367 million and same has been made part of PYA.
MYT determination states that Minimum tax / WWF / WPPF is pass through and as per KE the impact of same is around Rs.8,443 million. In light of above, the Authority has decided to allow the same as part of PYA subject to adjustment based on Audited financial statement once available publicly and KE provides the relevant record as required under MYT determination.
Other income-supply :- In light of the Authority’s decision actual other income data was obtained from KE (including gain on disposal of Generation assets i.e. Rs. 1.9 billion) and reported as Rs.7,826 million, as compared to allowed amount of Rs.6,240 million. As per the decision actual other Income (Including gain on disposal of Generation assets) i.e. Rs.7,826 million has been accounted for while working out the revenue requirement for FY 2023-24, instead of earlier allowed amount of Rs. 6,240 million on provisional basis. Once Audited financial statements are provided the final true up would be made in accordance with MYT tariff.
Member (Technical ) Rafique Ahmad Shaikh in his, additional note stated that in light of current operational realities and the critical need to ensure system reliability under all conditions—especially during emergencies and peak demand periods—he strongly urged the deferral of the decommissioning of the KCCP and BQPS-I power plants for the following reasons:
K-Electric’s increasing reliance on power imports from the National Grid, while economically beneficial, introduces significant operational risks. Although the interconnection capacity has recently been enhanced to approximately 2,072 MW, this represents a technical ceiling constrained by factors such as transformer loading, voltage stability, and transmission corridor limitations. A tripping or outage on a major interconnection—such as the 500 kV KKI or 220 kV NKI lines—can immediately result in a significant deficit of electric power. If compounded by the unavailability of a major internal generation unit—such as BQPS-ll or BQPS-Ill due to forced outage or maintenance or fuel unavailability—the resulting shortfall could exceed 1,000 MW. Such a supply gap would necessitate extensive load shedding and could jeopardize overall grid stability, especially during periods of high ambient temperature that coincide with peak consumer demand.
KE’s internal generation units serve purposes beyond simple megawatt contribution; they provide essential operational capabilities. These include spinning reserve for frequency regulation, system inertia for stability, black-start capability for system restoration, and the ability to operate in island mode during grid disturbances. Prematurely retiring these assets would undermine these critical functions and expose the system to heightened risks during external shocks. Past blackout incidents have demonstrated that internal generation was instrumental in ensuring timely restoration and maintaining system integrity.
According to him, it is important to highlight that, as of now, no infrastructure beyond the currently available 2,072 MW interconnection has been confirmed. Moreover, there are no merchant power plants currently operating within KE’s licensed area that can offer firm, dispatchable capacity under a market-based framework, nor has such a regulatory regime been implemented.
He has suggested that decommissioning of these two power plants (KCCP and BQPS-I) should be deferred for at least one year, during which time the following steps should be undertaken:
(i) Establishment of a Functional Merchant Power Market:- A comprehensive regulatory and commercial framework must be developed to enable merchant generators to participate in KE’s system, with clearly defined obligations for providing firm and standby capacity
(ii) Firm Supply Commitments from the National Grid: -A contractual or regulatory mechanism should be instituted to ensure KE can depend on firm, dispatchable capacity from the national system, particularly during contingency scenarios
(iii) Completion of Key Infrastructure Projects: – This includes the timely finalization and commissioning of the proposed new interconnection corridor with the National Grid, along with the completion of any ongoing grid reinforcement or capacity enhancement projects necessary to reliably accommodate higher levels of imported power.
In the absence of these critical assets, decommissioning the existing plants would significantly reduce operational flexibility and could hinder KE’s ability to meet peak demand reliably.
