Pakistan's power sector is bracing for another financial adjustment. The government signaled on Wednesday that a fresh tariff package is in the works, even as it seeks to pass on an additional Rs1.20 per unit fuel cost to consumers. This move comes against a backdrop of falling electricity demand, which dropped by over three percent in June compared to the same period last year. Main Developments At a public hearing, the National Electric Power Regulatory Authority (Nepra) scrutinized the performance of power sector entities and questioned the rationale behind excessive loadshedding. The regulator's Member Development, Maqsood Anwar Khan, voiced concern over reports of protests against prolonged outages, especially when government companies were simultaneously reporting a decline in demand. He specifically criticized the practice of revenue-based loadshedding. Power companies confirmed that loadshedding was implemented for four days in June, with magnitudes ranging from 93MW to 730MW. They attributed the reduced demand to several factors, including the rise of solar net metering, the transfer of Balochistan tube wells to solar power, and prevailing weather conditions. Power Division official Naveed Qaiser noted that the shift between solar power during the day and grid power at night was a key driver of fluctuating consumption patterns. Read also: Hyundai Motor India's Profit Plunges 35% on Supplier Fire, Rising Costs Background The financial mechanics of the proposed adjustment are complex. The Central Power Purchasing Agency reported that the reference fuel cost for June was set at Rs7.714 per unit, but the actual cost escalated to Rs8.9 per unit. This discrepancy necessitates the additional charge of Rs1.20 per unit in August bills to recover Rs15.7 billion. Power Division official Rihan Akhtar clarified that the net increase would effectively be around 86 paise per unit, as an existing 34 paise fuel cost adjustment (FCA) is set to expire and be replaced by the new charge, pending regulatory approval. The government team reported that total units sold in June stood at 9.995 billion, down from 10.337 billion in the same month last year. Consumption fell across the board, with the domestic and commercial sectors seeing a 3.5pc to 5pc reduction, and agriculture and bulk consumers experiencing a steeper 12pc to 29pc decline. The only bright spot was industry, which recorded 2.8pc growth. The higher fuel costs were partly attributed to the non-availability of contracted LNG from Qatar, forcing expensive spot market purchases and minor use of furnace oil. Why It Matters The regulator pushed back against the government's claims of improved efficiency. While officials stated that Discos' inefficiency costs had dropped from Rs591bn to Rs326bn over two years through a 1pc reduction in system losses, Nepra's Maqsood Anwar argued this was achieved through loadshedding and shutting down grid stations, not by improving governance or removing illegal connections. He stressed that real improvement requires field teams to eliminate power theft, not shutting down machines while people suffer in scorching heat. Industrial consumers raised alarm over reported reactor problems at three nuclear power plants—one in Karachi and two at Chashma. Both Nepra and government representatives sought to allay fears, stating that the availability of all nuclear plants stood at around 94pc, which is within the 8pc contractual limit for non-availability. The industrial sector also criticized the positive fuel cost adjustment, pointing to unplanned technical shutdowns, dependence on costly furnace oil and RLNG, and the non-availability of cheaper hydropower projects as contributing factors. What's Next Naveed Qaiser revealed that the government is developing a new power tariff package aimed at addressing time-of-use rates, captive power plant requirements, and battery energy storage systems. He indicated that consumer-installed battery systems would benefit the grid and tariff adjustment, but utility-scale installations could lead to a slightly higher tariff. He declined to share specifics, noting the package is still in the working stage and will be presented to the regulator once finalized. Industrial representatives from Karachi demanded a review of the existing incremental tariff package, claiming its impact is affecting other consumer categories, including domestic users. Qaiser responded that the package has equally benefited the entire industrial sector but acknowledged that the three-year incentive has completed six months. A data set has already been shared with Nepra for review and potential adjustments, leaving the door open for modifications in the coming months.