Committee recommends power purchase prices

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    NEA_BuldingKATHMANDU: A task force formed to fix power purchase tariff for hydropower projects with installed capacity of over 25 megawatts to up to 100 MW has recommended that Nepal Electricity Authority (NEA) buy electricity from such power producers at flat rates of Rs 8.40 per unit during dry season and Rs 4.80 per unit during wet season.

    The five-member task force formed under NEA Board Member Manoj Kumar Mishra submitted a report in this regard to the NEA management today.

    “The recommendation will now be tabled at the board of NEA. These rates will be introduced only if the board approves them,” Mishra told The Himalayan Times.

    Once the new rates become effective, NEA will start signing power purchase agreements (PPAs) with independent power producers seeking to build hydro projects with installed capacity of over 25 MW to up to 100 MW. So far this fiscal year, NEA has not signed any PPA with projects exceeding capacity of 25 MW, as it was awaiting introduction of new tariffs.

    NEA currently purchases electricity from projects with installed capacity of up to 25 MW at a flat rate of Rs 8.40 per unit during winter and Rs 4.80 per unit during summer.

    “We have recommended that base prices for signing PPA with projects exceeding 25 MW in capacity to up to 100 MW be no different than for projects of up to 25 MW,” Mishra said. “But we have suggested that the prices be reviewed a year after these projects start generating electricity at commercial level.”

    In this regard, audits would be conducted by an independent body upon completion of one year of electricity generation.

    “Based on the body’s report, NEA can raise power purchase prices by three per cent for a maximum of 11 times and a minimum of five times,” Mishra said.

    But the prices will not be escalated by referring to the compound price but on the basis of original price at which the PPA was signed, according to Mishra.

    This means if the power purchase price is raised by three per cent, from, original price of, say, Rs 8.40 per unit, the power producer stands to get Re 0.25 extra, or Rs 8.65 in total, after a year of electricity generation.

    But the escalated price of Rs 8.65 will not be used as a reference rate while raising the price by three per cent the next time. Instead, the original price of Rs 8.40 will be taken into account and only Re 0.252 extra will be provided to power producer on top of Rs 8.65.

    Source : The Himalayan Times