Capacity Payments Drop, Relief for Consumers

By Salma Khan

ISLAMABAD –Power Consumers have some sigh of relief as Capacity Payments have dropped by Rs 74 billion due to termination of contracts, lower hydropower availability, re-negotiation with IPPs and debt reprofiling of nuclear plants.

The National Electric Power Regulatory Authority (NEPRA) has revealed in its recent decision that a significant Rs74 billion reduction in capacity payments billed to power distribution companies (DISCOs) during the latest quarterly adjustment for fourth quarter 2024-25.

The power regulator has reported that capacity payments dropped due termination of contracts, lower hydropower availability, re-negotiation with IPPs and debt reprofiling of nuclear plants.Poor Governance Causes Prolonged Power Outages: Member Nepra

This has lowered the burden on the consumers who have been paying regular bills.

The honest consumers who pay regular bills, have been paying Rs 1.2 to Rs 1.8 trillion capacity payments every year. They pay these charges to those power plants who do not generate a single unit of electricity due to faulty agreements by different governments in their tenure in Pakistan.

According to NEPRA’s findings, the decline stemmed from Rs17 billion savings due to termination of Independent Power Producer (IPP) contracts, Rs19 billion from non-availability of Neelum Jhelum hydropower, Rs34 billion from debt reprofiling of K-2 and K-3 nuclear plants, and Rs4 billion from re-negotiations with IPPs.

XWDISCOs informed the regulator that lower capacity charges from the Central Power Purchasing Agency-Guarantee (CPPA-G) and higher sales volumes had reduced the overall burden. Industrial sales surged 46% compared to the same quarter of FY2023-24, largely due to captive power plants shifting to the national grid. Around 280 captive consumers moved to the grid during April–June 2025, supported by a tariff cut in the period.

FESCO reported a 183% jump in B4 category industrial sales following the integration of 200MW captive power into the grid. GEPCO posted 7.35% year-on-year growth, with over 20% growth in the quarter. HESCO’s industrial sales climbed 75%, while LESCO’s B3/B4 sales jumped from 996 million to 1.6 billion units, alongside a 9% rise in residential sales from anti-theft efforts.

MEPCO said 152MW of captive capacity was shifted, boosting sales. PESCO credited its growth to the Rs7.7/kWh tariff reduction and captive shifting. QESCO reported lower agricultural sales due to increased solarisation but secured a positive quarterly adjustment claim. SEPCO, with only 11 captive connections, saw a 22% drop in industrial sales. TESCO cited reconnections under court orders as a key driver of higher sales.