Plan to End Uniform Power Tariffs for Discos
Uniform power tariffs could end for privatised electricity distribution companies under a new reform package from the Privatisation Commission. Dawn reported the proposal on November 2, 2026. The plan aims to ease investor concerns about buying state-owned distribution companies, known as Discos, by giving buyers clearer rules on prices, supply and returns.
The most consequential change would dismantle the uniform tariff regime across those companies. Competing private suppliers could then charge different rates, while regulated tariffs would remain for consumers served under a Supplier of Last Resort mechanism. Other measures include a time-bound effort to trim tariff differential subsidies, and a move to realign domestic electricity prices with actual supply costs, while safeguarding targeted relief for vulnerable households. The regulatory multi-year tariff period would also extend from five to seven years.
The proposals appear in a 25-page draft titled Power Distribution Companies Post-Privatisation Regime: Market Architecture, Business Models and Regulatory Oversight. The Privatisation Commission has circulated the draft to relevant ministries, regulators and investors for feedback. It is not yet an approved policy framework. The proposal is expected to be presented to the prime minister this week.
Uniform power tariffs: what would change for consumers
Under the current uniform system, consumers in different Discos broadly face the same tariff, even though each company faces different losses, costs and service quality. Under the proposed model, licensed Competitive Suppliers would procure power, manage customer portfolios and compete directly in the retail market. Nepra, the regulator, would oversee both distribution networks and market competition.
Private suppliers could offer tailored tariffs and contract durations based on procurement costs, demand profiles, payment histories and service standards. They could also introduce customised packages for industrial, commercial and agricultural consumers, along with energy-efficiency solutions and structured payment options. Meanwhile, the regulated Supplier of Last Resort framework would guarantee uninterrupted power where market competition remains unavailable, or if a supplier fails.
The Distribution Network Operator will manage the regulated grid, provide non-discriminatory network access to licensed suppliers, and absorb line losses exceeding Nepra-approved benchmarks, with allowable losses recovered through regulated revenues.
Capacity payments, returns and subsidy reform
A cornerstone of the plan is transferring legacy generation capacity obligations from the Central Power Purchasing Agency, known as CPPA-G, to incoming private suppliers alongside customer portfolios. That step aims to prevent operators from cherry-picking profitable accounts while leaving fixed costs with the state. As each Disco is privatised, CPPA-G or a designated entity would auction its contracted capacity. Successful bidders would assume proportionate payment obligations and a representative customer mix, including protected consumers, along with existing cross-subsidies and associated commercial risks.
Participation would be voluntary, allowing suppliers to bid for specific megawatt allocations. The framework eliminates the existing one-megawatt eligibility threshold, as well as 400-megawatt and 800-megawatt transfer caps, with unallocated capacity offered in subsequent auctions.
The proposal also replaces asset-based returns with a performance-linked model known as Return on Equity, Improvements, Efficiency and Losses. Investors would receive a base return derived from the Capital Asset Pricing Model, with performance bonuses tied to service quality, operational efficiency and grid loss reductions. Nepra would align performance incentives and penalties with service reliability, outage reductions, technical compliance and prompt dispute resolution. Operational savings and loss reductions against benchmarks would be shared equally between utility owners and consumers, with performance-based returns capped at 50 per cent and audited annually.
Safeguards, firewalls and what happens next
What are uniform power tariffs?
They are the current system under which consumers across different distribution companies broadly face the same tariff, regardless of each company losses or costs.
Who proposed ending them?
The Privatisation Commission, in a 25-page draft on the post-privatisation regime for distribution companies, circulated to ministries, regulators and investors for feedback.
Would all consumers face market prices?
No. The draft keeps regulated tariffs for consumers served under a Supplier of Last Resort mechanism, and keeps targeted relief for vulnerable households.
When could the plan take effect?
It is not yet approved policy. It is expected to be presented to the prime minister this week, and full implementation would be phased alongside Disco privatisations.
What happens if a private supplier fails?
The territory network operator, as Supplier of Last Resort, would temporarily take over the failed supplier accounts, under a Nepra protocol designed to avoid interruption or duplicate deposits.
