ECC Approves Net-Metering Regulation Amendments to Ease Grid Burden on Consumers

ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet, chaired by Federal Minister for Finance and Revenue Senator Muhammad Aurangzeb, convened today and approved a series of changes to the current net-metering regulations to alleviate the increasing financial pressure on grid consumers.

This decision follows a notable rise in the number of solar net-metering users, resulting in significant financial consequences for grid-connected consumers.

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Among the approved amendments, the ECC has updated the buyback rate from the National Average Power Purchase Price (NAPP) to Rs 10 per unit. In addition, the committee has granted the National Electric Power Regulatory Authority (NEPRA) the authority to adjust this buyback rate periodically, ensuring the regulatory framework remains adaptable to changing market conditions.

However, it was clarified that the updated framework will not impact existing net-metered consumers who hold valid licenses, approvals, or agreements under the NEPRA (Alternative & Renewable Energy) Distributed Generation and Net Metering Regulations, 2015. These agreements will remain in effect until the expiration of the license or agreement, maintaining the agreed-upon rates and terms.

The ECC also authorized the revision of the settlement process. Under the new system, imported and exported units will be billed separately. Exported units will be purchased at the updated buyback rate of Rs 10 per unit, while imported units will be charged according to the applicable peak/off-peak rates, including taxes and surcharges, during the monthly billing cycle.

Moreover, the ECC empowered the Power Division to issue the proposed guidelines to NEPRA for integration into the regulatory framework, subject to Cabinet approval, ensuring uniformity and transparency in the implementation of these revisions.

This decision follows in-depth discussions regarding the growing impact of solar net-metering on the national power grid. The Power Division emphasized the urgent need for regulatory reforms, pointing out a significant drop in solar panel prices, which has led to a sharp increase in solar net-metering consumers. By December 2024, the financial burden on grid consumers reached Rs 159 billion, a figure projected to rise to Rs 4,240 billion by 2034 without timely intervention.

The ECC was informed that the number of solar net-metering consumers surged significantly, reaching 283,000 by December 2024, compared to 226,440 in October 2024. The total installed capacity also grew from 321 MW in 2021 to 4,124 MW by December 2024, reflecting the rapid expansion of the net-metering sector. However, the influx of solar net-metering consumers has led to higher electricity costs for grid consumers, undermining government efforts to lower power tariffs.

The ECC also examined the financial implications of the growing number of solar net-metering consumers, especially as they are exempt from paying the fixed charge component of the tariff, which includes capacity charges and fixed expenses of power distribution and transmission companies. This has transferred a disproportionate financial burden to grid consumers, driving up electricity tariffs and threatening the sustainability of the energy sector.

Furthermore, the committee noted that 80% of solar net-metering consumers are concentrated in nine major cities, with a substantial portion located in affluent areas. This geographic concentration emphasizes the need for regulatory reforms to ensure fairness in the energy distribution system.

The changes approved by the ECC represent a crucial step toward ensuring the long-term sustainability of the energy sector while safeguarding the interests of all consumers, particularly those dependent on the grid for electricity.

In other matters, the ECC received a detailed briefing from the Economic Advisor of the Finance Division on inflation trends for 2025, highlighting a downward trend in the Consumer Price Index (CPI), food inflation, and the Sensitive Price Indicator (SPI). The committee was also informed of a week-to-week decline in essential commodity prices, attributed to fiscal discipline, improved supply chains, and targeted subsidies. The Chair acknowledged these efforts and stressed the importance of maintaining vigilance to ensure price stability.

The ECC further discussed a proposal from the Ministry of Maritime Affairs regarding the export of Potassium Sulphate Fertilizer from Gwadar Port. The ECC approved an exemption for M/s Agven Private Limited, operating in the Gwadar North Free Zone, to export up to 10,000 tons annually or 50% of actual production, whichever is lower, until December 31, 2025. This decision supports the development of the Gwadar Free Zone while maintaining regulatory oversight through shipment limits and data monitoring.

Additionally, the ECC reviewed a proposal from the Ministry of Interior and Narcotics Control regarding the disposal of gold case/reward money under the Customs Reward Rules, 2012. The committee directed the Ministry to explain the delay in processing the case and to seek legal opinion from the Ministry of Law and Justice before resubmitting the proposal.

The ECC also approved several Technical Supplementary Grants (TSGs) for the ongoing fiscal year, including:

1. Rs. 250 million for the Ministry of Federal Education and Professional Training to support ICT-based educational initiatives, including smart classrooms, procurement of Chromebooks, technology parks, and high-impact training centers.
2. Rs. 220 million for the Ministry of Industries & Production to promote SME development, focusing on bankability, subcontracting, and international consultancy.
3. Rs. 36.099 million for the Ministry of Interior and Narcotics Control for helicopter maintenance by HQs Pakistan Rangers (Sindh).
4. Rs. 15.4 million for the Ministry of Interior and Narcotics Control for helicopter maintenance by HQs Frontier Corps Balochistan (North), Quetta.
5. Rs. 670 million for the Sustainable Development Goals Achievement Programme (SAP), reallocated from the Cabinet Division to the Ministry of Interior for further distribution to the ICT Administration.

The meeting was attended by the Minister for Power Sardar Awais Ahmed Khan Leghari, Minister for Maritime Affairs Mr. Qaiser Ahmed Sheikh, Minister for Petroleum Mr. Ali Parvez Malik, along with federal secretaries and senior officials from relevant ministries and divisions.