Electricity Regulatory Commission proposes new directive for electricity tariff

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November 7, 2019

The Electricity Regulatory Commission has drafted a directive to streamline fixing of electricity tariff by Nepal Electricity Authority (NEA), amid ongoing scuffle between the state-owned power utility and industrialists on the rationale of paying premium charge dues on commercial use of electricity.

As of now, the government authority has no such definite mechanism on revising the tariff for consumers. According to the commission, once the Consumer Tariff Directive is approved, it will set criteria for the state-owned power utility to fix electricity tariff for various user groups.

Last May, the government had formed the regulatory commission with mandate to govern the energy sector, fix tariffs, set construction and safety standards, and establish codes governing hydropower plants, the electricity authority, transmission lines and distribution networks.

Ram Prasad Dhital, member of the commission, said they have come up with a proposal allowing the NEA to fix new tariff rates only on the basis of actual financial needs of the country’s power monopoly. “After the directive is put into effect, the NEA can forward the new rates based on its annual revenue requirement, operation costs, earmarked expenses for the new projects, and loan and interest repayments, among others,” said Dhital.

In 2015, citing power outage problem, the NEA had imposed additional fee on industries that consume high amount of energy. Industrialists however have denied paying the dues of more than Rs 10 billion that the NEA has slapped them under the premium charge. The industrialists have been blaming the NEA for arbitrarily charging the premium charges using facilities of dedicated feeders and trunk lines.

According to NEA record, 185 out of 298 commercial users have been paying high premium charges. These industrialists have been pressurizing the government to waive the premium charge that they have been slapped even for the period when load shedding has come to end.

Citing disagreement of industrialists, the government has announced even to allow the aberrant industrial customers to clear their power bills in installments. However, the entrepreneurs are still reluctant to go with the government’s new decision.

Dhital said the proposed directive is expected to bar the NEA from charging rampant energy price while keeping in view maintaining intact the NEA’s financial position and relieving consumers from exorbitant tariff hikes. “Implementation of the directive is expected to prevent such issues in future,” he said.

Earlier, the NEA used to revise tariff on the recommendation of Electricity Tariff Fixation Commission. However, there was no proper guideline for the fixation of tariff rates. Dhital said the existing mechanism of fixing electricity tariff rates will automatically turn functionless after the new directive is endorsed.

Dhital said the regulatory commission will assess the energy fare proposed by the NEA through experts and will also take opinions from general people and other stakeholders to revise the tariff rates. “The directive also talks about making the NEA breakdown the consumer prices differentiating groups in households, industries, and commercial users,” said Dhital, adding that they have planned to implement the electricity charge based on the cost of service modality once proper mechanism is developed.

 

Source: My Republica