Regulatory body rejects Nepal Electricity Authority’s tariff proposal


Electricity Regulatory Commission is mulling to enforce a new directive on tariff fixation.

November 13, 2019

A week after the Nepal Electricity Authority forwarded a tariff proposal to Electricity Regulatory Commission seeking to slash electricity rates for industrial consumers and suggesting rates for electric vehicle charging stations, the regulator has rejected the proposal.

The regulator rejected the proposal on grounds that the power utility forwarded the rates in haste while the regulator was mulling to enforce a new directive on tariff fixation.

“The commission through its soon-to-be enforced directive on tariff proposal has set criteria that the power utility must fulfil before any tariff revision is approved by the regulator,” said Dilli Bahadur Singh, chairperson of the commision. “We will send a letter to the utility on Tuesday seeking more information as mandated by the directive before allowing it to make changes to existing electricity rates.”

According to Singh, homework needs to be done by the power utility before seeking tariff revision and it can not simply ask the regulator to approve the tariff through a plain letter.

The power utility in the proposal had asked the regulator to review and approve the electricity rates which have remained unchanged for over two years because of the scrapping of former electricity tariff fixation commission and delayed formation of the new regulatory body.

The proposal had pitched slashing high power rates for commercial entities, community drinking water projects and factories using power through dedicated feeders, a cause of a major row between the power utility and the industrialists.

As per existing billing rates, the power utility charges the factories using dedicated feeders 70 percent more than what the general households pay for using electricity.

Industrialists have time and again complained that the power utility has been taking exorbitant charges despite the country witnessing an end to the power crisis which had forced the utility to hike rates earlier.

The power utility had proposed the rates for dedicated feeder users to be slashed by 50 percent, removal of demand charge of Rs155 per month levied for community water projects which supply water to people in hilly and rural areas.

The new tariff proposal had also forwarded a tariff rate for electric vehicle charging stations, a crucial infrastructure touted to boost electric mobility in the country, leading to increased electricity consumption.

Amid the uncertainty over standard tariffs for charging stations, some transport entrepreneurs have already invested in charging stations and are awaiting the authorities to make things easier.

Sundar Yatayat, which runs four electric buses in Kathmandu has been operating a station installed with 30 kW, 60 kW and 120 kW charging ports at a cost of Rs5.4 million excluding taxes.

Company officials recently told the Post that they were ready to invest in more stations only if the authorities fix a standard rate and other norms for operating charging stations.

The private sectors’ plan to invest in EV charging stations is likely to be deferred as the Electricity Regulatory Commission is yet to issue the final directives on tariff fixation.

According to officials close to the situation, the regulator could have asked it to submit supporting documents mandated by the new directives once they were issued rather than outrightly rejecting utility’s proposal.

“The rejection hints at the underlying political tussle between the regulator and power utility while delaying a much-needed tariff revision and approval by adding additional layers to the process,” said an anonymous official. “The power utility plans to forward the same rates for various sectors as proposed in the recent proposal after compiling other documents sought by the regulator.”

A week ago, the commission drafted a directive which requires the power utility to undertake lengthy assessments of its projected annual revenue requirement to obtain permission to revise its tariffs.

As per the directive, the commission will review the capacity demand charge levied on industrial consumers, the energy charge paid by general consumers, the annual return of the power utility from investments, the cost, quality and quantity of electricity supplied through the country in relation to the source, the interest expenses and the power purchase commitments of the power utility before making a decision on revising the tariff.

According to Ram Prasad Dhital, a member of the commission who oversees legal and external affairs, the directives — which are currently open for stakeholders’ review and comments — will be passed by the regulator within a week.


Prahlad Rijal

Source: The Kathmandu Post