Nepra to review tariff cut request for 4 govt power plants

ISLAMABAD: In a significant development aimed at lowering electricity costs, the National Electric Power Regulatory Authority (Nepra) has admitted joint applications filed by the Central Power Purchasing Agency-Guarantee (CPPA-G) and four state-owned power plants for a reduction in key tariff components. A public hearing on the matter has been scheduled for April 24, 2025.

The tariff adjustment request covers major government-run facilities, including National Power Parks Management Company’s Balloki and Haveli Bahadur Shah plants, Central Power Generation Company’s 747MW Guddu plant, and the Northern Power Generation Company’s Nandipur plant. If approved, the changes could directly impact capacity payments and overall consumer tariffs.

The proposals include revisions in the indexation mechanism for operation and maintenance (O&M) costs, a reduction in the insurance cap to 0.8–0.9 percent of the approved EPC cost, and a shift to a hybrid “take-and-pay” model for the Return on Equity (RoE) component — an approach that introduces conditional payments tied to plant output.

The hybrid “take-and-pay” model would allow these companies to receive only 35 percent of the RoE component under the current capacity payment (CPP) structure by default.

Additional RoE payments would only kick in if the plant’s output exceeds 35 percent of its contract capacity, creating an incentive for operational efficiency and reduced idle payments.