Bad incentives

Nepra’s approval of K-Electric’s request to raise base tariffs highlights a deeper structural flaw in our power sector: a system that rewards poor performance while penalising the public. When a utility like KE asks for guaranteed margins while shifting its future losses onto consumers, it removes any incentive to improve efficiency or reduce losses. Instead, the burden is unfairly passed on to those with the least power to absorb it. Higher tariffs disproportionately hurt low-income and marginalised communities. Unable to pay, they fall into cycles of disconnection, non-payment, or resort to unsafe, informal connections – further increasing KE’s technical and commercial losses. This creates a self-reinforcing loop of inefficiency and inequity.

One potential fix is to mandate net metering parity – requiring KE to pay solar users the same rate it charges them. This would force the utility to compete on service and cost, rather than relying on regulatory shields. Paired with clear policies on solar panel recycling and environmental compliance, such reforms can shift us toward a fairer, greener and more accountable energy system. Rather than perpetuating a cycle of guaranteed returns and pass-through costs, we must align financial incentives with performance and sustainability.

Hasan Raza

Karachi