The Punjab Power Development Company Limited (PPDCL) faced strong opposition from power companies and tough questions from the regulator on Tuesday. The company has sought an electricity tariff increase of more than Rs3 per unit for three hydropower projects.

The National Electric Power Regulatory Authority (Nepra) held a public hearing on PPDCL’s petition covering the Chianwali, Marala and Pakpattan hydropower projects.

During the hearing, PPDCL reported a total fixed charge of Rs7.4316 per kilowatt-hour (kWh), amounting to Rs371.54 million. The company sought to raise the rate to Rs10.9133 per kWh.

Officials from Gujranwala Electric Power Company (Gepco), Multan Electric Power Company (Mepco) and the Central Power Purchasing Agency-Guarantee (CPPA-G) opposed the proposal. They warned that a tariff increase would raise electricity costs for consumers. They also cautioned that it could encourage other hydropower companies to seek similar revisions.

PPDCL Seeks Changes to Generation Benchmarks

PPDCL asked Nepra to revise the plant factor and increase the assumed annual canal closure period from 20 to 34 days.

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Company officials said Punjab had initially indicated a 20-day canal closure. However, that estimate did not account for unscheduled closures.

PPDCL also sought to reduce the annual energy benchmark from 49.995 gigawatt-hours (GWh) to 34.045 GWh.

The company said the engineering, procurement and construction (EPC) contractor’s design supported estimated annual generation of 43.067 GWh at a 65.5% plant factor.

However, Nepra’s earlier determination used the 49.995 GWh benchmark and a capacity factor of 75.5%.

PPDCL argued that actual water flows at the Marala hydropower project had fallen by around 26% compared with the historical flows used in the feasibility study.

Canal Closures and Low Water Flows Affect Output

PPDCL said the original feasibility study and EPC contract did not account for scheduled and forced outages. The studies also assumed shorter annual canal closures than the company now reports.

The feasibility study allowed 15 days for canal closures, while the EPC design assumed 20 days. PPDCL cited an actual annual closure period of 34 days.

After accounting for outages, longer canal closures and lower water flows, the company estimated annual generation at 34.045 GWh. This figure corresponds to a 51.4% capacity factor.

PPDCL said the revised benchmark remained higher than the performance levels of run-of-canal hydropower stations operated by the Water and Power Development Authority (Wapda).

Company Requests Lower Insurance Cap

PPDCL also asked Nepra to allow insurance costs up to 0.8% of the EPC cost. It proposed reducing the operating insurance cap from 1.35% to 0.8%, or the actual cost, whichever is lower.

The company said it had agreed with the power purchaser to lower the insurance cap to 0.8% of the EPC cost.

To compare actual insurance expenses, PPDCL proposed converting the capped amount of $0.2772 million into Pakistani rupees. It suggested using the US dollar exchange rate applicable on the insurance valuation date for the relevant year.

Proposed Changes to Tariff Structure

PPDCL also reported an agreement with the power purchaser to shift the tariff structure from “take-or-pay” to “take-and-pay.”

Under the proposed arrangement, the seller would assume most-run and hydrological risks that previously fell on the buyer.

The company further proposed annual indexation of all fixed and variable operation and maintenance (O&M) costs. The adjustment would apply to both foreign and local components and would use the National Consumer Price Index (NCPI).

PPDCL also proposed ending upward US dollar indexation of its return on equity (RoE) from January 1, 2026. It suggested fixing the exchange rate at Rs280.55 per US dollar and passing on rupee appreciation through annual adjustments.

Nepra’s review will determine whether the company’s proposed changes to generation benchmarks, insurance costs and tariff structure justify a revision to the approved rates.