NEPRA’s proposed formula aims to cut electricity prices by Rs. 20 per unit during a three-month winter package. The primary mechanism for achieving this reduction involves adjustments to the “Balance of Tariff.” This includes revising capacity payments, surcharges, and improving operational efficiencies within the power sector.
NEPRA’s analysis of the current electricity price structure reveals the following breakdown:
| Component | Cost (Rs./Unit) |
|---|---|
| Capacity Charges | 17.01 |
| Taxes and Surcharges | 15.28 |
| Distribution Margins | 3.10 |
| Repair, Revenue, Adjustments | 0.01 |
| Transmission Charges | 1.37 |
| Net Generation Cost | 7.62 |
| Total Current Price | 45.06 |
NEPRA’s document suggests that by removing surcharges of Rs. 7.52 per unit and adjustments of Rs. 0.67 per unit, the electricity price could be reduced to Rs. 25.20 per unit. Further elimination of other charges could potentially bring the price down to Rs. 20.04 per unit.
Breakdown of Potential Price Reduction
The following table demonstrates the potential impact of removing specific charges:
| Scenario | Price (Rs./Unit) | Reduction (Rs./Unit) |
|---|---|---|
| Current Price | 45.06 | – |
| After Removing Surcharges & Adjustments | 25.20 | 19.86 |
| Potential Price After Further Adjustments | 20.04 | 25.02 |
Ministry of Water and Power’s Winter Relief Package (2024)
In November 2024, the Ministry of Water and Power introduced a winter electricity relief package designed to encourage increased power consumption during the winter season. This package offered a flat rate discount of up to Rs. 26.07 per unit on additional electricity consumption compared to the previous year. The package was valid for three months, from December 2024 to February 2025. This package differed from NEPRA’s proposal as it was based on increased consumption compared to the previous year, rather than a flat reduction on the existing tariff.
Key Components of the Proposed Reduction
The proposed reduction focuses on several key areas:
- Capacity Payments: These are payments made to power plants for their availability, regardless of actual electricity generation. Revising these payments could lead to significant cost savings.
- Surcharges: These are additional charges levied on consumers for various reasons. Removing or reducing these surcharges is a key component of the proposed price reduction.
- Operational Efficiencies: Improving efficiency in power generation, transmission, and distribution can reduce overall costs.