Electricity Tariff Hike: TESCO and PESCO's Five-Year Plan Sparks Debate
A Controversial Proposal
In a move that has sparked discussion, Tribal Areas Electricity Supply Company (TESCO) and Peshawar Electric Supply Company (PESCO) are seeking a significant increase in tariffs over the next five years (2025-2029). This proposal, under the Multi-Year Tariff (MYT) mechanism, has raised eyebrows and prompted a closer look at the justifications provided.
PESCO's Tariff Request
PESCO has proposed a tariff of Rs 41.21 per unit for the financial year 2025-2026, with a gradual decrease to Rs 38.75 per unit by 2029-2030. This request is part of a comprehensive plan to secure revenue requirements for the coming years.
Revenue and Investment Projections
The companies have outlined their revenue needs, with TESCO requesting an average increase of Rs 4.35 per unit over the five-year period. This request is supported by a detailed investment strategy focused on network expansion and adherence to industry standards. TESCO aims to enhance system efficiency and manage losses by reallocating load from PESCO's grid to its own stations.
System Losses and Efficiency
TESCO's recent independent loss study revealed a total system loss of 12.02%, indicating technical and structural challenges. However, the company projects a significant improvement to 9.6% for the financial year 2024-2025, achieved through operational enhancements and system optimization. For the control period (2025-2030), TESCO maintains a constant projected loss level of 9.6%, with a focus on transmission and distribution (T&D) losses.
Projected Sales and Losses
The projected unit sales for the control period show a steady increase, with 1,352 million units in 2025-2026 rising to 1,433 million units in 2029-2030. T&D losses are projected at a constant 8.6% for the entire period, with a breakdown of 0.78% transmission losses and 7.82% distribution losses.
Financial Projections and Approvals
TESCO has sought approval for various financial aspects, including the Distribution Margin of the Power Business, projected other income, and the Weighted Average Cost of Capital (WACC). These projections are in line with anticipated demand and the single-buyer model.
Public Hearing and Decision
The National Electric Power Regulatory Authority (NEPRA) will hold a public hearing on November 3, 2025, where both DISCOs will present their cases. This hearing will be a crucial step in determining the fate of the proposed tariff increases.
And Here's the Controversial Part...
While TESCO and PESCO have provided detailed justifications, the proposed tariff hikes have sparked debate. Some argue that the increases are necessary to support infrastructure development and maintain stable operations. Others question the impact on consumers and the potential for alternative solutions. What do you think? Should these companies be granted the requested tariff increases, or are there better ways to address the challenges they face?
