Hooray for electricity consumersThis is the first time that power users are being recognised as entities with enforceable rights.
One of the most exciting, and important, proposed changes to the electricity sector in Nepal was announced last week, quietly and without fanfare. On May 25, the Electricity Regulatory Commission (ERC) released a draft directive on the Protection of Electricity Consumer Rights 2023. Such an important announcement, though only a proposed directive at this stage, should have been accompanied by more intentional and larger scale outreach.
The ERC is inviting public comments on the draft directive. Unfortunately, it provided only 15 days for public comments. This is too short a time for any meaningful response, that too on such an important principle. The length of time provided for comments and the subdued way it was announced casts doubt on the overall intent and motivation for this directive.
Despite these misgivings, the draft directive aiming to protect the rights of electricity users is worth a closer look and engagement from all stakeholders.
The striking feature of the directive is the very acknowledgement that electricity users have rights in the first place. This is a major milestone and represents a significant change from even a few years ago when electricity consumers had to bear long hours of power cuts with no recourse.
Thus far, Nepal’s electricity sector reforms have focused primarily on the supply side. The customer was a silent entity who often had to quietly suffer the poor power quality and supply that was provided to them. Through this directive, the ERC has finally placed consumers within the frame.
The recognition of the electricity consumer as an entity with rights opens the door for many types of subsequent reforms and policies. Nepal’s electricity sector, for example, is vexed by the challenge of not having enough demand for all the supply. At the same time, there hasn’t been enough inquiry into reforms on the retail side of electricity–the segment that deals with the sale of electricity to the final consumer. Reforms in the retail segment could help unlock the demand that has not been able to come onto the system.
Many consumers, for example, may choose to defer acquiring an electric appliance because they believe the power quality will not be good enough. Reform measures in the retail side can provide them the confidence that power supply and quality will be reliable, thus enabling them to undertake investments in household, commercial or industrial electrical equipment.
Additional reforms, such as retail deregulation which allows consumers to choose their electricity supplier, could help create new markets, draw in more players, diversify risk between generators and distribution companies, and spur a whole new level of investment.
The recognition of electricity consumer rights is also an essential prerequisite for the devolution of the sector. If the Nepal Electricity Authority (NEA) must ultimately devolve to grant provinces and local governments the right to manage electricity supply, as is envisioned in the constitution, it is important to have the standards and processes for measuring the quality of service. The devolution of the NEA remains a distant dream, but for now the first brick in that direction has been cast.
The draft directive seems to have missed the historic significance of what it is creating. Much of the directive is devoted to extensive discussions on processes. It creates standards for quality of supply of electricity, and similarly standards for reliability of supply of electricity—the core elements on which consumer rights are protected. It also provides extensive discussion of the process that is to be followed. For example, where a complaint must be filed or within what period it must be addressed.
But the draft directive doesn’t do enough to articulate the rights of electricity consumers. Given the historical significance, and the fact that this is the first time that electricity consumers are being recognised as entities with enforceable rights, the draft would have benefited from a sharper think about what exactly are the consumer rights that the directive is seeking to protect.
The draft directive details very specific periods over which complaints received from consumers must be handled by the power distribution company or electricity cooperative. For example, in one instance it notes that transformer problems must be repaired, and electricity supply reinstated within 18 hours in a municipality, and within 48 hours in a rural municipality. While these are specific, it offers no method to measure the response time. If the enforcement on the rights of electricity consumers was always going to be difficult, the approach presented in the draft directive will make the practicality of the implementation very challenging.
Consumer as producer
Perhaps the biggest gap in the draft directive is that it misses an opportunity to align the idea of consumers with the current times. Today, electricity consumers are not just consumers. They are also producers of electricity. Many household, commercial and industrial consumers in Nepal, for example, have already installed a solar rooftop and often feed their production into the grid.
On solar rooftops, the NEA is already violating the rights that the government provides to electricity consumers. The government, for instance, guarantees net metering where consumers can offset what they export against what they import. Contrary to the government’s policy, the NEA provides one feed-in tariff, a low fixed rate for electricity sold from solar rooftops into the grid. Such consumers currently have no recourse, and many are not getting their due because the NEA does not implement net metering rules as per the government’s policy. In its current form, the draft directive on electricity consumer rights does nothing to rectify the problem or protect the rights of these consumers.
Energy technologies already available today allow consumers to interact with the grid in different ways. For example, consumers could charge their batteries or electric vehicles during off peak hours when there is low demand and sell it back to the grid at peak times where there isn’t enough supply. With demand response, consumers could shift, or even voluntarily shut, their load at peak times so that the grid demand and supply always remain balanced.
Fifty years ago, the idea of consumer as merely a recipient or receiver of electricity would have been appropriate. Today’s electricity and energy systems, combined with digital technologies, have changed the way power systems operate.
Consumers are important participants in the grid with the capability to buy, sell and store electricity, and adjust load as needed in real time. In such a seminal directive protecting the rights of electricity consumers, the ERC must not miss the opportunity to include the right of consumers also to produce, sell, store, adjust their load and benefit from Nepal’s electricity market.