Industrial, agri consumers: PD starts talks on new ToU tariff mechanism

ISLAMABAD: The Power Division has initiated consultations with industry stakeholders on a new optional Time of Use (ToU) tariff mechanism, aimed at offering relief of over Rs 6 per unit to industrial and agricultural consumers while improving recovery of fixed power sector costs. Under the proposed scheme, industrial tariffs could decline to Rs 21.58 per unit from the existing Rs 27.71 per unit, translating into a potential relief of Rs 6.13 per unit, officials from the Power Planning and Monitoring Company (PPMC) informed participants during a briefing session. Officials explained that the current tariff structure places a relatively lower burden on fixed charges while imposing higher variable rates, which discourages higher consumption. At present, industry is charged around Rs 1,250 per kW per month in fixed charges, covering only about 20 per cent of the total fixed costs attributable to the sector. READ MORE: Power Division mulls optional tariff for industrial users The average variable rates stand at Rs 26.23 per unit for B1 category, Rs 27.05 for B1-ToU, Rs 24.83 for B2-ToU, Rs 25.47 for B3-ToU, and Rs 25.16 for B4-ToU consumers. The PPMC maintained that the imbalance between fixed and variable charges creates an incentive for industries to suppress consumption. “The issue can be streamlined by increasing fixed charges and reducing variable rates accordingly,” an official said, adding that the reform is essential for ensuring financial sustainability by securing capacity payments through fixed charge recovery. The proposed regime will be optional (opt-in) and applicable to industrial and agricultural consumers of DISCOs and K-Electric, including existing and new connections as well as those shifting from non-ToU categories. The structure envisages higher fixed charges combined with three ToU slabs offering comparatively lower energy rates to encourage electricity usage, particularly during off-peak and solar generation hours. Smart meters (AMI) will be mandatory for participants to enable accurate measurement and implementation of ToU pricing. Consumers opting into the scheme will be allowed to revert to the existing tariff after a minimum of six months with one month’s prior notice. Fixed and variable charges will be reviewed quarterly based on cost of service to address any imbalances. Other applicable components such as Fuel Charges Adjustment (FCA), Quarterly Tariff Adjustment (QTA), and Debt Servicing Surcharge (DSS) will remain in place under the legacy billing mechanism. Fixed charges under the proposal will be calculated on 50 per cent of sanctioned load or actual Maximum Demand Indicator (MDI), whichever is higher. Industry representatives, however, raised several concerns and proposed adjustments to make the package more viable. Leading industrialists, including Aamir Sheikh, Rehan Javed, and Arif Bilwani, suggested that fixed charges should be calculated on 25 per cent of sanctioned load or MDI, whichever is higher, instead of the proposed 50 per cent. They argued that fixed charges are already high and adequately cover capacity payments, and therefore additional quarterly adjustments beyond FCA should not be imposed. Highlighting inefficiencies in the current system, industry representatives noted that against a sanctioned industrial load of 22,000 MW, actual consumption is only around 3,000 MW, resulting in a load factor of just 13 per cent. In contrast, MDI-based load factor stands at 33–35 per cent, making it a more accurate basis for billing. The industry also demanded flexibility in opting out of the scheme, proposing that the exit period be reduced to one month instead of six months, citing seasonal demand fluctuations and global market uncertainties. On tariff differentiation, stakeholders pointed out that higher voltage consumers (B3 and B4) incur lower system costs and losses, and therefore should be charged lower fixed rates compared to B1 and B2 categories to incentivize efficient energy use. They further recommended extending solar hours from 9 am to 5 pm instead of 9 am to 4 pm, with a proposed tariff of Rs 6.23 per unit during these hours to better manage the system’s “duck curve.” Industry representatives argued that the proposed structure offers limited savings at load factors of 35–45 per cent and only breaks even at around 60 per cent, suggesting that the package could be made more attractive by reducing fixed charges by Rs 1,000 per kW of MDI. Managing Director PPMC, Abid Lodhi, told Business Recorder that the scheme is designed to be revenue-neutral and therefore does not require approval from the International Monetary Fund (IMF). However, he confirmed that approval from NEPRA will be sought once the proposal is finalized. Officials emphasized that the consultation process is at an initial stage and the final design will aim to ensure a balanced outcome. “The scheme should not benefit one segment at the cost of another,” the PPMC stated. Copyright Business Recorder, 2026

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