Pakistan’s growing reliance on solar power is reshaping electricity consumption, but it is also creating a new challenge for the country’s power sector. As grid electricity sales decline, the government is seeking to recover around Rs34 billion from consumers through a proposed quarterly tariff adjustment of about Rs1.35 per unit. The move has sparked criticism over whether consumers are effectively being penalized for reducing their dependence on the national grid through solar energy.
The proposed quarterly tariff adjustment has triggered strong opposition from consumer and industrial representatives, who argue that declining electricity consumption, increased solar adoption and higher capacity-related costs are placing an unfair burden on consumers who remain connected to the national grid.
At a public hearing held by the National Electric Power Regulatory Authority (Nepra) on Wednesday, industrial representatives questioned the proposed additional tariff and warned that rising electricity prices were already hurting the competitiveness of businesses.
The issue has raised a broader question: are consumers who remain dependent on the grid effectively being penalized because overall electricity demand is falling as more households and businesses generate their own power through solar?
The proposed adjustment was initially estimated at Rs23.03 billion but was later revised upward to Rs33.78 billion, according to figures presented to Nepra.
Capacity charges make up the largest component of the proposed increase, amounting to Rs46.28 billion.
Variable operation and maintenance costs add another Rs4.94 billion. These increases are partly offset by negative adjustments of Rs13.52 billion in Use of System Charges and Market Operator Fee and Rs21.18 billion under the incremental consumption package.
The adjustment also includes Rs3.04 billion related to transmission and distribution losses, along with Rs14.21 billion in unrecovered costs associated with Small Power Producers and Captive Power Producers.
The issue has raised a broader question: are consumers who remain dependent on the grid effectively being penalized because overall electricity demand is falling as more households and businesses generate their own power through solar?
Most major distribution companies reported around a 5 per cent decline in electricity sales. During the hearing, Nepra member Maqsood Anwar Khan questioned whether excessive loadshedding was one of the major reasons for the decline.
The situation highlights a structural problem in Pakistan’s power sector. Electricity generation and distribution costs include substantial fixed expenses, particularly capacity payments. When consumers purchase less electricity from the grid, these fixed costs do not necessarily fall at the same pace. The resulting gap can then translate into higher charges for the consumers who continue to buy electricity from the grid.
For consumers investing in rooftop solar, however, the policy creates a difficult contradiction. Solar reduces dependence on expensive grid electricity and can lower pressure on the power system, but falling grid sales can also increase the per-unit cost of recovering fixed system expenses.
Industrial representatives argued that consumers should not be made to bear the consequences of declining demand and structural inefficiencies in the power sector. They called for an immediate review of the proposed tariff package and warned that another increase in electricity prices could further damage industrial activity.
