Solar energy boom could hit electricity consumers with Rs34 billion burden

The government has proposed recovering about Rs34 billion from consumers of distribution companies and K-Electric for April to June 2026.

The proposed quarterly tariff adjustment is equal to around Rs1.34 per unit. The amount was initially estimated at Rs23.03 billion but was later revised to Rs33.78 billion.

Capacity charges make up major share

Capacity charges account for Rs46.28 billion of the proposed adjustment, while variable operation and maintenance costs add another Rs4.94 billion. Some of these costs are offset by negative adjustments of Rs13.52 billion in Use of System Charges and Market Operator Fee and Rs21.18 billion under the incremental consumption package.

The adjustment also includes Rs3.04 billion related to transmission and distribution losses. Another Rs14.21 billion represents unrecovered costs of Small Power Producers and Captive Power Producers.

Power demand falls as solar use grows

Officials from Peshawar Electric Power Company told the NEPRA hearing that electricity consumption had dropped by about 5 per cent. They said weaker demand from domestic and commercial consumers was a major reason, while increased household use of solar power had also reduced demand.

NEPRA Member Maqsood Anwar Khan asked whether load shedding was also contributing to the fall in electricity sales. Pesco officials confirmed that load shedding was continuing, including in areas where consumers regularly pay their electricity bills.

Khan said solar power had reduced pressure on the electricity system, especially during daytime hours. He also said the shift towards solar should not simply be blamed for lower electricity sales.

Industry opposes proposed increase

Industrial representatives opposed the proposed tariff adjustment during the NEPRA hearing. They argued that businesses were already struggling with high electricity costs and could not easily absorb another increase.

Tanveer Barry, representing the Karachi Chamber of Commerce and Industry, questioned the sharp rise in capacity charges. He asked why consumers should pay higher capacity costs while power companies were still carrying out load shedding.

Industrial representatives urged NEPRA to examine the proposed adjustment carefully before making a decision. They also called for the increase to be deferred because another rise in electricity prices could further weaken industrial competitiveness.

The proposed Rs34 billion recovery shows the difficult impact of falling electricity demand on the power sector. As more consumers move towards solar energy, traditional power sales can fall while fixed system costs remain.

For consumers, the main concern is whether lower power use will eventually lead to higher tariffs. NEPRA’s final decision will determine how much of the proposed cost is passed on to electricity users.

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