Cost recovery

This letter refers to the news story ‘Our power pricing dilemma’ (April 6, 2025). It is fair to argue that infrastructure costs of transmission and distribution systems, line losses and other overhead costs have to be recovered. But the real question is how to recover fixed costs. The best way to do so, in my opinion, is through a onetime payment, or a variant of it, when a new connection is established.

If the sales price exceeds the marginal cost (the cost of adding a new user), demand for power will be suppressed, cost of production will increase and overall losses to the economy will be far greater than any savings in generation costs. The burden of overhead costs will also increase for the remaining users. In this context,

Abdul Majeed

Islamabad