Net-metering cuts October fuel charges

Distribution companies seek Rs0.65/kWh relief in electricity bills

ISLAMABAD:

Power firms admitted on Thursday that solar net metering has led to a reduction in the burden of higher electricity rates on consumers and will provide a relief of Rs0.65 per unit on account of fuel charges adjustment for October 2025.

Pakistan's power sector posted a negative fuel charges adjustment (FCA) of Rs0.65 per kilowatt hour (kWh) for October, reflecting lower generation costs against the reference benchmark.

The calculation, shared in the latest data, showed an actual fuel cost of Rs8.7177/kWh versus the reference rate of Rs9.3685/kWh. The lower-than-expected generation cost created a negative FCA of Rs0.6508/kWh. Total units sold during the month were recorded at 9.63 billion, leading to an estimated gross FCA impact of around Rs6.27 billion for consumers.

The National Electric Power Regulatory Authority (Nepra) conducted a public hearing on Thursday to consider a tariff reduction of Rs0.65 per unit. Nepra raised questions over the demand for electricity. Officials of the Central Power Purchasing Authority (CPPA-G) said that demand was reduced during daytime, whereas it jumped during nighttime due to the use of solar.

Tanveer Bari, representing the Karachi business community, said that the utilisation of local coal and re-gasified liquefied natural gas (RLNG)-based generation had increased during the period under review, whereas the utilisation of hydel had decreased. He said that power generation from coal and RLNG will increase in the upcoming months. It means that the electricity price will increase.

He raised questions over high prices of coal-based generation compared to the previous month. A CPPA-G official said that coal-based generation had some fixed cost and some variable portion. He said that prices of local coal-based generation are reduced when its utilisation increases.

Participants also raised questions over utilisation of RLNG. Officials said that they were allocated 600 million cubic feet per day of RLNG and the entire allocation was used by power plants.

Bari said that Pakistan had become the largest country for solar panel imports. He said that consumers had switched to solar due to higher rates of electricity in the country.

During the hearing, it was highlighted in a presentation that net-metering supplies rose sharply in October as Pakistan's power distributors purchased 204.5 gigawatt hours (GWh) from solar consumers.

It eased the FCA burden for the month. New Nepra data showed that these units carried zero fuel cost, reducing the pooled fuel expense for distribution companies.

The latest dataset indicated that total net-metering units procured by DISCOs from July to October reached 573.7 GWh. October recorded the highest monthly uptake so far, driven by strong rooftop solar generation across urban centres.

Iesco led the procurement in October with 45.9 GWh, followed by Mepco at 51 GWh and Lesco at 58.3 GWh. According to Nepra's determination notes, net-metered energy directly displaces high-cost thermal generation and lowers the uniform FCA applied to consumers.

Lesco procured a cumulative 134.2 GWh of net-metered units over four months. Iesco followed with 139.7 GWh. Mepco recorded the largest total procurement at 157.7 GWh.

Electricity generation from local coal-fired plants reached 1,261 GWh in October 2025, which accounted for 12.76% of the total electricity generation at a cost of Rs13.1024 per unit.

In comparison, electricity produced from imported coal stood at 466 GWh at a cost of Rs14.3874 per unit. Furnace oil-based plants contributed 48 GWh at a significantly higher cost of Rs32.6908 per unit.

Gas-fired power plants generated 905 GWh, accounting for 9.16% of overall production at a rate of Rs13.3635 per unit. Meanwhile, RLNG-based generation contributed 1,949 GWh, representing 19.72% of the power mix at a unit cost of Rs21.0611.

Nuclear power remained the most cost-efficient source, which delivered 2,188 GWh (22.13% of total generation) at just Rs2.1728 per unit. Pakistan also imported 43 GWh of electricity from Iran, which amounted to Rs22.7572 per unit.

Renewable energy sources contributed as wind plants generated 185 GWh (1.87%), bagasse-based units produced 40 GWh (0.40%) at Rs10.7409 per kWh, and solar power added 96 GWh (0.97%) to the energy mix.