Kathmandu. The Electricity Regulatory Commission (ERC) has issued the ‘Electricity Consumers Tariff Fixation Directive-2083′ with the objective of making the electricity consumers’ tariff determination process more transparent, cost-based and consumer-friendly.

The directive has been brought into effect as per the decision of the Commission on August 3, exercising the powers given by the Electricity Regulatory Commission Act, 2074 and the Electricity Regulatory Commission Regulations, 2075.

The new directive clarifies the basis and principle to be adopted by the institutions licensed for distribution of electricity, the method of calculating the annual required income, the process of determining the tariff and other necessary criteria.

As per the directive, the distribution licensed entity i.e. Nepal Electricity Authority or any other related organization has to apply to the commission for determination of new tariff within at least three years of the imposition of tariff. In such an application, one year or multi-year tariff determination can also be proposed.

Similarly, an annual review of the tariff has been made. If the amount is collected more or less than the required income on the basis of the actual financial statement, it can be adjusted in the upcoming tariff determination.

According to the commission, this provision will create a clear basis for calculating the amount collected from the consumer or the amount collected less in the upcoming tariff.

As per the directive, the government’s ‘Energy Consumption Growth and Export Strategy, 2083’, policy and programme of fiscal year 2083/84, 100-point agenda related to governance reforms and policy guidelines of the Ministry of Energy, Water Resources and Irrigation can be used as the basis for determining electricity tariff.

According to the new system, issues such as increasing the overall consumption of electricity, encouraging industries and enterprises using electricity more, increasing energy efficiency and prioritizing production and consumption of green energy would be incorporated in the tariff determination.

Similarly, the Time of Day (TOD) system will be encouraged, where different tariffs will be applied according to the electricity consumption at different times of the day.

The directive also makes provision for gradually implementing the principle of long-term marginal cost of power generation on the basis of certain consumer segment, period, weather and voltage level keeping in mind the policies and priorities of the government.