CPPA-G in Nepra's Dock: The 2027 Power Price Arithmetic That Isn't Just 8%

What went up on the screen in Nepra's public hearing room was not a slide — it was six different futures. At the bottom, 25.883 rupees per unit; at the top, 29.255. Somewhere in between, 27.309. One document containing a spread of roughly three and a half rupees per unit on the average Power Purchase Price. It sounds like a technical detail. In reality, it is the gap between a spinner's googly and a slogger's sweep — both balls leave the same hand, and the outcome is the difference between sky and ground. The headline that went out — "around an eight percent increase" — never let that spread reach the front page. The biggest fact in the CPPA-G report is not that prices are rising — it is that the largest share of the price is being paid for something that was never generated.

Let us clear the picture. The Central Power Purchasing Agency (CPPA-G) has presented six scenarios for calendar year 2027 — from ideal to worst case. The base case puts total power purchase cost at 3.552 trillion rupees, assuming sales of 130,081 gigawatt-hours. Fuel cost is 1.319 trillion rupees and capacity charges 1.914 trillion. Per unit, that works out to 14.717 rupees in capacity charges against just 10.141 rupees in fuel. Overall, PPP settles around 27.309 rupees per kilowatt-hour, and that is the number the media converted into "roughly eight percent." Now flip it. In the ideal scenario fuel gets cheaper — a better RLNG and gas mix — and PPP slips to 25.883. But even in that ideal world the capacity bill stays at 1.914 trillion rupees. That is the portion you pay because generation capacity stands ready, whether or not it generates.

Nepra did not just ask for numbers at the hearing; it effectively demanded three sets of books. CPPA-G, ISMO and the Discos — all three showed discrepancies in demand projections. Questions were raised on RLNG availability, on the dollar rate, on Brent crude. And KIBOR — with an instruction to revise it from 11.70 percent to 12 percent. That is a small correction, but it tells you the report is not a final document; it is a draft for argument. CPPA-G officials themselves acknowledged uncertainty in fuel availability, exchange rates and future fuel-charge adjustments. The question is whether that uncertainty is sitting in the chair that will land on the consumer's bill from January 1, 2027.

Now the part that never makes the headline. The logic of capacity charges is simple — in a contract with an IPP you have paid for its availability, not its output. But when that contractual payment becomes more than half of total cost, the question arises whether the system is failing to pass on the benefit of cheaper fuel to the consumer. The gap between the ideal scenario and the base case is just 1.426 rupees per unit — while the journey from base to worst case is 1.946 rupees. The downside room is smaller than the upside risk. This is insurance-premium arithmetic — you cannot save the policy by cutting the premium, so the system's cost will not fall on fuel's promise either.

There is another dimension, which industrial representatives laid on the table. Aamir Sheikh called for immediate suspension of the incremental package and for FCAs (fuel charge adjustments) to be made prospective. His argument is straightforward — the package benefits a handful of industries while more than 90 percent of consumers carry the cross-subsidy burden. And in winter, FCAs could rise two to three times over. This is not a complaint that can be dismissed as "technical." A factory needs to forecast its production cost; if the FCA writes a new story every month, the whole projection becomes meaningless.

This is where the counter-intuitive point emerges that is least heard in this entire debate. A higher electricity price does not necessarily raise total electricity revenue in the same proportion. If higher prices pull down industrial and household consumption, fixed costs like capacity charges get spread over fewer units — pushing the per-unit price even higher. CPPA-G's base case assumes 2.6 percent demand growth, and the demand-sensitivity scenario lands at just 0.70 percent. The distance between those two figures is the hidden trap the entire tariff projection can fall into. The real risk is not fuel price — it is demand arithmetic. Because fuel you can buy from the market; consumption you cannot.

Add one more thing. The worst-case scenario assumes the dollar at 290 rupees, a level that flips the entire imported-fuel arithmetic. In the best scenario that same bill slows down. The spread between the two is 3.372 rupees per unit — not a theoretical debate, but a direct question about the consumer's pocket. And Nepra has made clear that the report's figures are not binding; they are under scrutiny.

Now back to the question the media never asked. Eight percent is the number that sells headlines, but the real game sits in that 1.914 trillion rupees of capacity payments, steady in every scenario. If any government tries to sell a story of bringing tariffs down on the strength of fuel alone without touching that figure, it is bowling the kind of ball that lands on the batter's head and is never seen by the umpire. Reviewing IPP contracts, improving utilization levels and reforming capacity payments — these are the three doors without which the 2027 arithmetic does not change.

So what next? Everyone will watch Nepra's final order, but even more attention belongs on one decision — whether the three agencies' differing demand forecasts are reconciled into a single model. When the Discos' sales estimate and ISMO's estimate do not sit in the same document, the consumer must be told how much the per-unit capacity charge rises if consumption falls. If that question goes unasked, the journey from eight percent to fifteen percent will also stay hidden on a slide — and show up on the bill.

I do not know which scenario Nepra will adopt as final. I do know that as long as capacity charges remain the heaviest part of the arithmetic, the relief story based on cheaper fuel alone will remain incomplete. That is the gap no headline tells you about — and one every consumer will feel on their next bill.