High electricity prices strain consumer affordability: survey

DISCOs fear low recovery as consumers lose ability to pay due to financial constraint

ISLAMABAD:

A recent survey has revealed that soaring electricity tariffs in Pakistan are pushing the affordability limits of the masses and significantly impacting their consumption patterns. This concerning trend not only burdens consumers but also poses hurdles to the recovery of power distribution companies (Discos). The survey titled “The impact of rising electricity prices on consumer behaviour: The case of power distribution companies in Pakistan”, conducted by the Institute of Policy Studies in Islamabad, examined the impact of rising electricity prices on consumer behaviour.

It involved over 1,000 households and 140 shop owners across the country’s top 10 cities. The findings shed light on the adverse effects of escalating electricity tariffs on both consumers and Discos. According to the survey, the increasing electricity prices have resulted in a decline in consumption, as individuals strive to manage their escalating bills. However, despite efforts to reduce electricity usage, a substantial portion of respondents reported no significant decrease in their bills. This disturbing trend has far-reaching consequences for Discos, as it severely impacts their recovery rates.

Diminishing revenues hinder their ability to pay for power purchases from generation companies, maintain distribution networks, and service debts. Moreover, these financial constraints limit the scope for infrastructure upgrades, quality services, and overall improvements in the reliability of electricity supply. The survey calls for effective measures to address the affordability concerns of consumers and proposes strategies for Discos to mitigate the negative impact of rising prices. It emphasises the need for enhanced governance and regulatory measures in the energy sector, affordable electricity tariffs, and flexible payment options to accommodate varying economic circumstances.

The study also stresses the importance of tackling issues such as load shedding and increasing consumer awareness about peak hours when electricity costs are higher. The research provides valuable insights into the link between rising electricity prices and consumer behaviour in Pakistan.