Discos seek higher fuel cost adjustment for February

ISLAMABAD: After charging Rs1.63 per unit as positive fuel cost adjustment (FCA) this month, power companies have sought another Rs1.64 per unit for April bills as demand increased.

The Central Power Purchasing Agency (CPPA) demanded the higher fuel cost on account of power consumed in February, even though more than 75 per cent of power generation came from domestic and cheaper sources.

Electricity consumption was reported to be around 11.42pc higher than the same month of last year but about 15pc lower than January 2026.

Once approved, the power companies would charge an additional amount of about Rs12.2bn to consumers of all the power companies, including ex-Wapda Distribution Companies (Discos) and K-Electric, in the billing month of April.

The National Electric Power Regulatory Authority (Nepra) has called a public hearing on March 31 to examine the request for additional FCA charges for consumers.

The CPPA also filed the petition for a higher FCA for February consumption. The power companies have claimed an average fuel cost of Rs8.37 per unit for February compared to Rs8.23 per unit in the same month last year.

The CPPA reported that 7,427 billion units (gigawatt hours) were delivered to Discos in February, compared to 8,762 GWh delivered to Discos in January.

The power companies claimed that the average fuel cost amounted to Rs8.37 per unit in February against a pre-approved reference fuel cost of Rs6.74 per unit, therefore, the need for about Rs1.64 per unit additional FCA.

The CPPA said about 7,696 GWh of electricity was generated in February at an estimated fuel expenditure of Rs62.75bn (Rs8.15 per unit), of which 7,427 GWh of energy was delivered to Discos at a cost of Rs62.2bn (Rs8.37 per unit), leading to a higher fuel cost than already charged to consumers in February bills.

Hydropower regained its top position among fuel sources contributing to the national grid, with a share of over 23pc after annual canal closures in December and January, but remained below its full potential. Hydropower had contributed only 8pc of electricity to the grid in January.

This was followed by nuclear power, which accounted for an 18.83pc share in February, compared to 17.5pc in January when a few plants were under forced outage or undergoing annual refueling.

Local coal-based power generation ranked third, contributing 16pc to the national grid in February, followed by imported coal at nearly 15pc. Local gas accounted for 11.52pc, while regasified liquefied natural gas (RLNG)-based generation contributed 9.47pc, marking a sharp fall from 22pc in January.

There was no furnace oil and diesel-based generation in February, unlike January, when 3pc of the generation had come from furnace oil.

RLNG-based generation was the most expensive at Rs23.21 per unit, followed by imported coal at Rs13.56, local coal at Rs13.5, and local gas at Rs12.22 per unit.

The nuclear fuel cost stood at Rs2.50 per unit in February, up from Rs2.23 in January and Rs1.82 in February last year.

The three renewable energy sources — wind, bagasse and solar — together contributed 5.63pc to the grid. Wind and solar have no fuel cost, while bagasse-based plants recorded a fuel cost of Rs10.39 per unit, with a 1.19pc share. This is almost double the Rs5.96 per unit recorded in February last year. Electricity imports from Iran accounted for 0.45pc of the total, at a fuel cost of Rs23.21 per unit.

Under a federal government decision, the fuel charge adjustment for Discos is also applicable to K-Electric consumers with effect from the start of the current fiscal year in June 2025.

The FCA is reviewed every month as per the tariff regime applicable across the country and is usually applicable to consumers’ bills for one month only.

Under the tariff mechanism, changes in fuel costs are passed on to consumers on a monthly basis through an automatic process, while quarterly adjustments — on account of variations in power purchase price, capacity charges, variable operation and maintenance costs, use of system charges, and transmission and distribution losses — are built into the base tariff by the federal government.