Power Division says two-part policy offers lower variable rates, higher fixed charges; consumers free to stay on exist
ISLAMABAD:
The Power Division said on Thursday that the new two-part tariff policy for industries is optional, and industrial consumers will have the freedom to choose whether to opt for this alternative regime or remain on the existing tariff structure.
In a statement, the division said there will be no compulsion for any consumer to switch to the two-part tariff policy. The division issued the statement after a story published in The Express Tribune that the government had shared a new plan with the International Monetary Fund (IMF) to link the fixed cost of electricity bills with consumption from the national grid.
The Power Division said the proposed tariff structure is based on a different cost allocation mechanism, featuring relatively higher fixed charges coupled with lower variable energy charges differentiated across various time periods, including solar generation hours and night-time hours. The objective is to provide consumers with an alternative tariff option that may better align with their operational and consumption patterns, according to the division.
It said the proposed tariff design is intended to benefit process industries and other consumers operating on a 24/7 basis with high utilisation factors and stable demand profiles. Such consumers may find the alternative tariff structure more economical and predictable.
Any industrial consumer who determines that the proposed tariff does not suit its operational requirements can simply continue under the existing tariff regime without any adverse consequences, it added.
However, the Power Division did not officially clarify whether, once an industrial consumer opts for the policy, it can immediately switch back to the normal tariff regime if consumption from the national grid falls significantly.
The Power Division said public discourse on energy sector reforms should be guided by accurate facts and technical understanding. It said the optional tariff offering should not be characterised as a punitive measure against solar adoption, as this risks creating unnecessary confusion among consumers and stakeholders.
According to the proposal shared with the IMF, fixed costs will be spread over higher sales, which would also reduce the per unit cost of electricity. The government hopes that an increase in demand of approximately 1,000 MW could materialise within six to 12 months of implementation, although actual outcomes will depend on market response and participation levels. At present, the energy cost for all consumers is much higher than the fixed cost being charged from them, although the government has been constantly increasing fixed prices for quite some time.
The Power Division believes there is no incentive for industrial consumers to increase their consumption to keep electricity bills low.
A spokesman said many industrial consumers maintain a high sanctioned load or maximum demand indicator capacity but consume relatively low amounts of energy. He said the power sector must still maintain generation, transmission and distribution infrastructure to ensure standby availability for these consumers. This infrastructure carries fixed costs regardless of actual energy consumption.
