Power Division Defends NEPRA’s KE Tariff Review as Pro-Consumer

ISLAMABAD: The Power Division has vehemently rejected claims that the National Electric Power Regulatory Authority (NEPRA)’s recent multi-year tariff (MYT) review for K-Electric (KE) harms Karachi’s power consumers, branding such assertions as “misleading” and “factually baseless.”

In a robust statement, the Power Division accused certain factions of deliberately misrepresenting the NEPRA decision to sow confusion, asserting that the review prioritizes fairness, accountability, and consumer protection.

The spokesperson emphasized that K-Electric, as a private utility, must outperform public-sector distribution companies (DISCOs) like IESCO, FESCO, and GEPCO in operational efficiency. “Government-run utilities surpass KE in recoveries, line losses, and consumer service,” they declared.

The Power Division clarified that the NEPRA review scrutinizes KE’s management and efficiency. KE currently sources 2,000 megawatts of cost-effective power from the national grid, with the capacity to draw more, unlike its pricier self-generated electricity.

The spokesperson stressed that KE consumers pay uniform per-unit rates nationwide. “If KE slashes operational costs, it stabilizes national rates, directly benefiting consumers. How is this anti-consumer?” they questioned.

They highlighted that KE consumers, like others, receive government subsidies, but taxpayer funds will no longer cover KE’s inefficiencies or losses—a move in the national interest. Previously, KE passed uncollected bills to taxpayers via higher tariffs. Now, NEPRA permits only verifiable, unrecoverable losses—proven after exhaustive efforts—in tariff calculations. “This prevents KE from arbitrarily inflating consumer bills. Isn’t that a win for Karachi?” the spokesperson argued.

The Power Division noted that NEPRA capped KE’s profits to a reasonable range, severing its 24–30% returns on equity tied to the U.S. dollar. “With KE’s assets and operations rooted in Pakistan’s rupee economy, the dollar linkage was eliminated,” the statement affirmed.

An independent consultant hired by KE revealed that the company was allowed to recover up to 6.5% of losses through bills but criticized KE’s management for failing to curb losses despite heavy spending. “NEPRA’s reduction of this allowance directly benefits consumers,” the spokesperson asserted.

The review also mandates retiring KE’s idle generation plants, mirroring actions taken with public-sector plants, to lower fixed costs and ease consumer burdens. “Excluding non-functional plants from tariffs serves Karachi’s interests,” they added.

Hailing the review as a “milestone in regulatory reform,” the Power Division emphasized its long-term benefits: preventing unjust profits, reducing taxpayer burdens, encouraging loss reduction, and ensuring equity between KE and state-run DISCOs.

The Power Division reassured that shutting down inefficient KE plants will not trigger load-shedding in Karachi, as ample cheaper electricity from the national grid and sufficient transmission capacity are available.