Taxes on Electricity Bill in Pakistan

MEPCO Bill includes various taxes in addition to the charges of consumed electricity. The following are taxes on electricity bills in Pakistan:

  1. FPA
  2. TRS Surcharge
  3. FCS Surcharge
  4. Deferred amount
  5. ATR Tariff
  6. QTR Tariff
  7. Adj/DMC
  8. EDS Surcharge

Taxes on Electricity Bill

Following is the detail of all taxes on the electricity bill:

FPA

FPA is one of the taxes on electricity bills that are charged by consumers. It stands for Fuel Price Adjustment. The charge that is implemented on the fluctuation of fuel cost is called FPA. It’s calculated based on the difference between fuel actual cost and benchmark cost (Reference).

FPA in addition to covering the additional cost or credit received by the consumer is based on the actual cost of fuel. If the actual cost is higher FPA is added to the electricity bill, if it is lower, then credits are received by the customer. Taxes on electricity bills in Pakistan are increasing due to an increment in FPA. You can download a MEPCO Bill to see the taxes.

You can calculate the FPA on your MEPCO Bill by using the following formula:

FPA = (Actual cost of fuel – benchmark cost of fuel) * Total units of electricity consumed

Benchmark cost of fuel: Reference cost of fuel for calculating the FPA.

The actual cost of fuel: The cost of fuel to generate electricity in a given period.

If the cost of fuel is Rs. 10 per unit, benchmark cost (Rs. 8 per unit), and total units consumed (100 units), FPA will be: FPA = (10 – 8) * 100 = Rs. 200

Fuel Price Adjustment
Fuel Price Adjustment

TRS Surcharge

TRS, Transmission and Distribution Surcharge, is an implementation fee for certain areas. It’s 2nd type of taxes on electricity bills that are implemented to upgrade and modernize the distribution and transmission infrastructure in those areas. The value of taxes on electricity bills varies depending on the region, and the investment needed.

You can calculate the TRS by using the following formula:

TRS = Total cost of infrastructure / Total units of electricity consumed

If the total cost of infrastructure is Rs. 100,000, and the total units of electricity consumed (1000 units), then TRS will be:

TRS = 100,000 / 1000 = Rs. 100 per unit.

FCS

It’s the abbreviation of Finance Cost Surcharge. It is implemented to build new infrastructure and projects in that area. Taxes on electricity bills vary based on region and demand of cost to develop the latest infrastructure. You can pay your bill through the latest online billing methods.

It is calculated by using the following formula:

FCS = Total cost of borrowing / Total electricity consumed.

If the total cost of borrowing and total electricity consumed is Rs. 100,000 and 1000 units respectively, then FCS will be:

FCS = 100,000 / 1000 = Rs. 100 per unit.

Taxes on Electricity Bill
Taxes on Electricity Bill

Deferred Amount

If the electricity bill is not paid within the due date then the amount of fine implemented on the consumer is known as the deferred amount. It’s intended to encourage the customer to pay their bill within the due date. It’s usually referred to as a late fee. To avoid the additional charges of taxes on your electricity bill you must pay your bill within the due date and time.

You can calculate the deferred amount using the following method:

  1. Find out the due date of the bill.
  2. Calculate the delayed days.
  3. Multiply the delayed days by daily deferred charges.

If the due date of the MEPCO bill was 10th January and the current date is 15th January, the delayed days are 9. If daily deferred charges are 2% then the deferred amount will be:

Deferred amount = 9 days * 2% * total bill payment.

ATR Tariff

The average Transmission and Distribution (ATR) Tariff is the cost of transmission and distribution of electricity lines in that area. Taxes on electricity bills are charged in consumers’ bills to develop and modernize the infrastructure in that area.

ATR tariff is calculated by the following formula:

ATR tariff = Total cost of infrastructure / Total electricity consumed

If the total cost of infrastructure and total units of electricity consumed is Rs. 100,000, and 1000 units respectively then the ATR tariff will be:

ATR Tariff = 100,000 / 1000 = Rs. 100 per unit.

QTR Tariff

Quarterly Transmission and Distribution (QTR) Tariff is charged to customers on a quarterly bases for the transmission and distribution of electricity.

QTR Tariff is calculated by the following formula:

QTR Tariff = Total cost of infrastructure / Total electricity consumed

If the total cost of infrastructure is Rs. 100,000 and the total units of electricity consumed are 1000 then the QTR tariff will be:

QTR Tariff = 100,000 / 1000 = Rs. 100 per unit.

Adj/DMC

Adjustment or Demand Management Charge (Adj/DMC) is a fee that is implemented for the demand management program to improve the efficiency of the electric system by reducing the peak demand for electricity.

It can be calculated by using the following formula:

Adj/DMC = Total cost of demand and management programs / Total electricity consumed.

EDS Surcharge

An electronic data system (EDS) surcharge is a fee that is applied to consumers in response to paying bills through an online system. It’s implemented to cover the online processing of payment which is usually a small amount of percentage.

It can be calculated by the following formula:

EDS Surcharge = Total bill amount * EDS surcharge percentage

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