Nepra's Hearing on Electricity Prices: The Real Story Behind Rs27.309 per Unit

On a May morning, a hearing was underway in Nepra's office in Islamabad. The fans in the room turned slowly, and the files on the table in front hid a number that would determine the electricity bill of every industry, every home, and every shop in Pakistan — Rs27.309 per kilowatt-hour. This number was not written on a cricket scoreboard, but its impact was as wide as a World Cup final. The Central Power Purchasing Agency (CPPA-G) presented six different scenarios for CY2027, and Nepra questioned them. This hearing was a snapshot of the moment when a country's energy policy was wrestling with its own estimates. Pakistan's power system has been going through a strange phase for the past few years. On one hand, electricity demand is rising; on the other, the cost of generating power — especially fuel and capacity charges — is increasing. In its base case, CPPA-G has projected electricity sales of 130,081 gigawatt-hours for 2027, based on a growth rate of 2.6 percent. Along with this, total power purchase cost is estimated at Rs3.552 trillion. The largest share of this is capacity charges — Rs1.914 trillion, or Rs14.717 per unit. Fuel cost is Rs1.319 trillion, which works out to Rs10.141 per unit. This is the arithmetic that gave rise to the most debate at the hearing. Nepra sought clarification from CPPA-G on several points. First, questions were raised about the availability and price of RLNG (re-gasified liquefied natural gas). Second, the exchange rate of the rupee against the dollar — the base case assumes Rs279 per dollar, while the worst-case scenario projects up to Rs290. Third, Brent crude prices, which directly affect fuel costs. Fourth, and most importantly, the contradiction in demand estimates. The data from CPPA-G, ISMO (Independent System Market Operator), and distribution companies (Discos) did not match. Nepra also ordered that KIBOR (Karachi Interbank Offered Rate) be raised from 11.70 percent to 12 percent, because interest rates affect the cost of capital. There is one thing to understand here that often slips through the headlines. The biggest element of this entire exercise is capacity charges, which are almost untouched by fuel prices. Even if oil prices fall, even if gas becomes cheaper, capacity charges will remain around Rs1.914 trillion. This means the consumer can only get relief if contracts with Independent Power Producers (IPPs) are reviewed or capacity payments are reformed. Even in CPPA-G's most optimistic scenario, where fuel costs are assumed lower, the average power purchase price works out to Rs25.883 per unit. And in the most pessimistic scenario, it reaches Rs29.255. That is a difference of about four rupees per unit — which for an industrial unit is a difference of crores. Industrial representatives strongly objected at the hearing. They said the incremental package benefits only a few selected industries, while more than 90 percent of consumers bear its burden. One representative, Aamir Sheikh, directly demanded the immediate suspension of the incremental package and the application of future fuel charge adjustments (FCA) on a pre-declared basis. He warned that FCA could rise two to three times during winter, making it impossible to estimate production costs. This is the same dilemma that has persisted in Pakistan's energy policy for years — on one hand, raising electricity prices is necessary to keep the sector running; on the other, every increase weakens industrial competitiveness. A cricket-like scene emerges here: just as a batsman has to play cautiously after two wickets fall, Nepra has to set a price that neither breaks the consumer nor the power sector. But the real game is in the demand estimates. If industries buy less electricity because of higher prices, total sales could fall below 130,081 gigawatt-hours. And if sales fall, the same capacity charge will now be spread over fewer units — meaning per-unit cost will rise further. CPPA-G has assumed only 0.70 percent demand growth in one of its scenarios, reflecting this very fear. This is a chakravyuh in which every step can increase the next problem. I was not surprised that the echo of this hearing was heard less on social media and more in the industrial world. In the past few years, whenever electricity prices have risen, the common man's reaction has been just one — waiting for the bill. But this time something was different. CPPA-G officials themselves admitted that there is uncertainty in fuel availability, exchange rates, and future fuel charge adjustments. That is, the estimate presented itself knows its limitations. This transparency is a good start, but will it give relief to the consumer? Probably not, because the final decision is in Nepra's hands and that date — January 1, 2027 — is not far away. One thing that is being most ignored in this entire debate is the structure of capacity charges. The contracts Pakistan has with power producers link payment not to the quantity of generation but to available capacity. That is, even if a power plant is not running, it will still be paid. This arrangement was created when the power shortage was the biggest problem. But today, when demand is below estimates, this same arrangement is becoming a burden on the consumer. Even in the most optimistic scenario, this charge remains at Rs1.914 trillion. That is, the benefit of cheaper fuel will reach the consumer only when there is a structural change in capacity payments. There is another aspect of this hearing that received less discussion — the clash of demand estimates between Discos, ISMO, and CPPA-G. Nepra clearly said that the figures of these three are different. If the demand model itself is not reliable, how reliable will the cost estimate based on it be? This question is not just technical but policy-related. In the power sector, every estimate affects everything from a farmer's tubewell to a factory's machine. And if the estimates prove wrong, the next FCA could be even heavier. Now that the hearing is over, the question is what Nepra will do. There are three paths. First — accept CPPA-G's base case, which will fix the price at Rs27.309 per unit. Second — modify some assumptions, such as keeping KIBOR below 12 percent or changing the RLNG mix. Third — reject the entire estimate and demand a new model. The third path seems the safest, but it will take time, and time is the biggest cost here. I started journalism in Chandigarh in 2026, and I learned then that the most important news is not what appears on the front page, but what appears on the next page and changes someone's life. This hearing is that kind of news. This is not a cricket field, but there is a scoreboard here too — and that scoreboard will be written on the consumer's electricity bill. The only difference is that in this game there is pressure to hit a six every over, and even the bowlers feel insecure. When the Nepra officials rose from the hearing chair, the May sun outside had become harsh. But the file in their hands hid a question that is not just Pakistan's but every country's that is grappling with an energy crisis: can we keep the price of electricity within the consumer's reach while also paying producers for their capacity? The answer will be decided by the date in 2027. But until then, every FCA, every exchange-rate shock, and every demand estimate — all together are writing a story that the common man will read in his electricity bill, perhaps without knowing that its first draft was written in a hearing room.