Winter power tariff announced, consumers incentivised to use electricity over gas

The government has approved a winter electricity package, setting a Rs. 26.07 per unit rate for additional consumption of 25% above the baseline for the months of December, January, and February.

This tariff is part of an effort to reduce national gas consumption costs during the winter season, with specific conditions attached for consumers to avail the benefits.

The Economic Coordination Committee (ECC) approved the package for industrial, domestic consumers using over 200 units, as well as commercial and general service users. The package is aimed at increasing the use of available generation capacity while reducing gas demand. The Ministry of Energy confirmed that the tariff of Rs. 26.07 per unit would apply only to the additional consumption beyond the baseline.

This package, valid for three months, does not include any subsidy. The International Monetary Fund (IMF) had earlier rejected a proposal to extend the package duration to six months (December to May).

The cost of electricity generation is currently Rs. 26.07 per unit, while the government charges consumers up to Rs. 52 per unit after adding taxes. Notably, the winter package will only apply to consumption that exceeds the benchmark by 25%. If the additional consumption does not exceed the threshold, consumers will have to pay the standard tariff of Rs. 52 per unit.

The ECC specified that the winter package will not apply to consumers using net metering, wheeling systems, or those with faulty meters. Strict conditions were also set for consumers with time-of-use meters, where consumption will be calculated based on peak and off-peak usage.

The package also applies to K-Electric consumers. Negative fuel cost adjustments will not apply to additional consumption, but if fuel prices rise above the reference price, the extra cost will be passed on to consumers.

To calculate the fuel cost, the government has assumed an exchange rate of Rs. 300 per dollar, which adds further burden to consumers.

The government has also acknowledged that the increase in electricity prices led to an 8% decrease in electricity demand during last year’s winter months, compared to a 6% reduction in the previous year. The implementation of this winter package will require the power sector to allocate additional regasified liquefied natural gas (RLNG) to meet the increased demand.

The Petroleum Division has promised to supply additional RLNG, but if it fails to provide the extra imported gas, the cost of additional consumption will exceed Rs. 26.07 per unit for consumers.

This winter package is part of broader efforts to manage the country's energy demands during the colder months, with measures in place to ensure that the system remains sustainable despite rising fuel costs.