NEA seems reluctant to remove hydrology penalty against small hydro projects

KATHMANDU: Despite the regular order of the Electricity Regulation Commission to remove hydrology penalty against small hydropower projects, Nepal Electricity Authority (NEA) seems reluctant to remove the penalty.

Since NEA has not removed the penalty yet, the Independent Power Producers’ Association (IPPAN) submitted a memorandum to the commission again on Tuesday.

The power utility was instructed not to impose the charge on two occasions. In March, the commission had issued a notice directing NEA not to charge any hydrology penalty against small hydropower projects with capacity of less than 10 megawatts.

Again after seven months, the commission issued the same directive even if such projects fail to generate the projected quantum of electricity stating that the companies authorized to sell and purchase electricity have not followed legal provision. The penalty is levied if the project doesn’t produce 50 percent of the total energy that it has declared.

During winter, the flow of water in the river decreases due to which there is a possibility of less quantum of electricity being generated than the predicted amount. Therefore, the commission has instructed NEA not to impose a penalty on projects with capacity of less than 10 megawatts effective from this winter.

The commission has also mentioned that NEA does not have to compensate electricity producers in case of any damages in the transmission line or substation due to situations that are beyond human control including floods and earthquakes.

However, the promoters of the sick projects have claimed that NEA has continued collecting penalty regularly due to which they had approached the commission through IPPAN on October 1 to seek the necessary help.

On the other hand, NEA is hesitating to remove the penalty stating that there will be huge loss due to its removal. Chairman of the authority, Dilli Bahadur Singh, said the authority has sought to eliminate the clause from the regulation reasoning that removing the penalty would cause a huge loss to the authority.

He said the regulation could be reviewed after studying whether removing the penalty really causes a loss to the authority or not.