The proposed seasonal tariff structure will require final approval from the federal cabinet. If sanctioned, the new tariff could be implemented soon, representing a significant shift in energy cost management
ISLAMABAD: The federal government is considering a major overhaul of the electricity and gas tariff structures to better align with seasonal demand patterns. The proposed changes, currently under review, aim to adjust tariffs based on seasonal variations rather than maintaining a fixed rate year-round. This initiative seeks to balance energy consumption and reduce financial burdens on consumers by leveraging seasonal fluctuations in demand.
The key aspect of the proposal involves introducing seasonal tariffs to encourage higher energy use during typically low-demand periods and alleviate capacity payment pressures. Specifically, the government is contemplating reducing electricity rates during the winter months when electricity demand significantly drops. This change is intended to offset the lower demand, which typically falls to around 10,000 megawatts (MW) in winter compared to 25,000 MW in the summer. By lowering electricity tariffs in winter, the government hopes to ease the financial strain of capacity payments that currently burden consumers.
In parallel, the proposal also suggests introducing lower gas tariffs during the summer months to encourage gas consumption when electricity demand peaks. This seasonal pricing strategy is designed to shift the energy load, potentially leading to a more balanced and efficient use of resources throughout the year. The proposed seasonal tariff structure will require final approval from the federal cabinet. If sanctioned, the new tariff framework could be implemented relatively soon, representing a significant shift in energy cost management. This adjustment is aimed at optimizing energy usage patterns and improving financial efficiency within the sector.
Meanwhile, the National Electric Power Regulatory Authority (NEPRA) has recently announced adjustments to electricity tariffs that present a mixed outcome for consumers. For September, NEPRA has approved a reduction of 37 paisas per unit in the monthly fuel adjustment charges. This decrease is expected to provide some relief to consumers by lowering their electricity bills for the coming month. However, this reduction is tempered by a notable increase in electricity rates under the quarterly adjustment framework.
NEPRA has sanctioned a substantial increase of Rs1.75 per unit as part of the fourth-quarter adjustment for the financial year 2023-24. This adjustment will impact consumer bills for September, October, and November, resulting in higher electricity costs despite the minor reduction in the monthly fuel adjustment charges. The proposed seasonal tariff adjustments, if approved, are expected to address some of the inefficiencies in energy cost management by aligning tariffs with actual demand patterns.
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