Fuel Prices used for electricity generation are volatile and are influenced by global supply-demand, dynamics of international and local commodity markets and macroeconomic factors. In addition to fuel price movements, the overall cost of electricity generation is also affected by changes in generation mix (i.e. relative share of different fuel sources) and the volume of electricity generated during any given month. Fuel Charge Adjustment (FCA) is an approved regulatory mechanism by NEPRA that allows electricity utilities to recover (or refund) the costs based on variation in fuel prices, changes in generation mix and volume used to generate electricity.

FCA may be positive or negative depending on whether weighted average fuel costs per unit incurred during a given month are higher or lower than the weighted average reference fuel costs for the same month as approved in the tariff. These adjustments are reviewed and approved by NEPRA and subsequently passed onto consumers through electricity bills, usually with a time lag.

For example, FCA pertaining to electricity consumed in October 2025 was charged onto consumer bills in December 2025 in line with NEPRA’s decision in the matter of Fuel Charges Adjustment (FCA) for the month of October 2025 dated December 09, 2025.

It is important to note that FCA represents retrospective recovery or refund of fuel cost already incurred by utility companies.

FCA is calculated and determined by NEPRA for all DISCOs across Pakistan including K-Electric. This adjustment represents the difference between weighted average actual fuel cost per unit during the relevant month against the weighted average reference fuel cost per unit for the same month as approved in Tariff.

To maintain a uniform tariff across the country, FCAs for XW-DISCOs and K-Electric are determined through Tariff Rationalization. Accordingly, the FCA determined for XW-DISCOs is also applicable to K-Electric consumers in line with the Federal Government’s uniform tariff policy and to ensure the financial sustainability of the power sector.

An increase in FCA generally reflects higher fuel prices used for electricity generation and/or changes in generation mix. When fuel price per unit is lower as compared to reference month, the FCA is negative and the benefit is also passed onto consumers bills.

You may see multiple FCA entries in your electricity bills during certain months. This occurs when NEPRA schedules the recovery of FCAs for multiple prior months within a single billing cycle. For instance:

• FCAs for October 2023 & February 2024were recovered from customer bills in June 2024.
• Similarly, FCAs for August 2023, November 2023 and December 2023 were recovered from customer bills in August 2024.

Both the timing and quantum of FCA application are determined by NEPRA.

The FCA amount and its calculation are clearly mentioned at the front of your KE bill along with the breakdown of applicable charges.