ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) has called a public hearing on Tuesday (Nov 26) to approve the implementation of a winter incentive package at the request of the federal government to spur falling electricity demand.

Under the government plan, the subsidy-neutral incentive package will come into force on Dec 1 and end on Feb 28, 2025, expecting to boost power consumption by about 16 per cent. The regulator has sought public comments on the subject without disclosing the formula for the calculation of ‘incremental consumption’ over the past three years.

The public hearing is based on formal approval granted by the Economic Coordination Committee (ECC) on Nov 19 to the subsidy-neutral cheaper electricity rates for residential, commercial and industrial consumers on incremental usage over three winter months (December to February) to stimulate power consumption amid high tariffs and economic downturn.

According to the power division’s summary to the ECC the “recent surge in electricity tariffs coupled with challenging economic conditions had led to reduced demand across various consumer categories”, down by 6pc in winter 2023 with an additional 8pc in FY24. Also, the winter demand on average was about 11,196 megawatts lower than in the summer months.

Karachiites failed to get any benefit in a similar package previously as KE got stay order on its implementation

A similar package in FY20 is reported to have improved consumption by 16pc while another industrial support package in FY21 and FY22 had helped demand grow by 15 and 14pc but fell by 8pc and 2pc in 2023 and 2024. “Any increase in the electricity demand during winters will not only enable optimum use of system generation capacity but also help reduce gas demand due to shifting of favourable demand towards electricity”, the power division said.

The package would apply to industrial, commercial, general services, and domestic consumers of more than 200 monthly units nationwide, including K-Electric. It was noted that this may also require additional LNG, which is already in oversupply. The KE’s consumers had not been able to benefit from a similar package in the past since the utility had stayed its implementation through courts and used those funds for its cash flows.

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The ECC approved the “winter demand initiative for the industrial, domestic (ToU and non-ToU consumers exceeding 200 units, commercial and general services consumers of Discos and K-Electric to enable optimum use of system generation capacity besides reducing gas demand due to shifting of favourable demand towards electricity”, an official announcement said last week.

The package would apply to incremental consumption over the past few years and entail an 18-50pc discount depending on various consumer categories and consumption slabs. Being subsidy-neutral, the IMF is reported to have consented to the package.

The cheaper rates under the incentive package would be limited only to the incremental consumption for three sectors — meaning that the historic consumption would be charged at the existing rates without any discount.

The additional consumption would be calculated using a formula based on the last three years’ billed units. For this, historical consumption for the last three years will be higher than last year’s consumption or average weighted consumption on a rolling basis, with 50pc weight to FY24, 30pc to FY23 and 25pc to FY22.

Published in Dawn, November 23th, 2024