Nepal Electricity Regulatory Commission issues open access directive for transmission and distribution system

KATHMANDU: The Nepal Electricity Regulatory Commission (NERC) has issued the Transmission and Distribution System Open Access Directive, 2082, marking a significant regulatory step toward liberalising Nepal’s power sector and enabling non-discriminatory access to the national electricity network.

The directive has been framed in line with the General Network Access Framework issued by the Ministry of Energy, Water Resources and Irrigation, with the objective of operationalising open access across Nepal’s electricity system. Through this framework, the regulator aims to create a structured, transparent, and competitive environment for power generation, consumption, and trade.

Under the directive, power projects with a capacity of 5 megawatts (MW) or above, captive power plants with a minimum capacity of 1 MW, and industrial and commercial consumers connected at 33 kV or higher voltage levels with contracted energy of 5 MW or more will be eligible to access the transmission and distribution system on a non-discriminatory basis. For cross-border electricity trade, the minimum open access capacity has been fixed at 10 MW.

The directive explicitly guarantees entities granted open access the right to use the transmission or distribution system without discrimination, subject to compliance with the regulatory provisions. This provision is expected to reduce market entry barriers for private sector players and large consumers seeking flexible power sourcing arrangements.

Three categories of open access

The framework introduces three distinct categories of open access based on duration. Long-term open access applies for periods exceeding five years, typically aligned with the duration specified in a power purchase agreement. Medium-term open access covers periods longer than one year but up to five years. Short-term open access is defined as access for up to one year, with a minimum duration of 24 hours.

In terms of priority, the directive states that long-term open access applications will receive first priority, while short-term access will be accorded the lowest priority. This prioritisation is intended to ensure system stability while still allowing flexibility for short-term and spot market transactions.

NEA designated as nodal agency

For the purpose of receiving applications, processing requests, and delivering open access services, the Electricity System Operation Department of the Nepal Electricity Authority (NEA) has been designated as the nodal agency, unless otherwise decided by the government. The nodal agency will be responsible for operational coordination, technical assessment, and implementation-related procedures.

To operationalise open access, the directive has defined nine categories of charges applicable to users. These include transmission charges, wheeling charges, deviation settlement charges, cross-subsidy charges, additional surcharges, standby charges, reactive energy charges, scheduling charges, and system operation charges.

However, the regulator has clarified that not all open access users will be subject to all categories of charges. The applicable fees will depend on the nature and duration of access, system usage, and other technical parameters. The commission has also retained the authority to revise these charges periodically.

For long-term open access users, there may be an additional obligation to contribute financially to system upgradation and strengthening, particularly where network reinforcement is required to accommodate the requested access.

Contracts, procedures, and dispute resolution

The directive mandates the nodal agency to develop detailed operational procedures to ensure effective implementation. It also requires the preparation of standard contract templates governing the relationship between transmission or distribution licence holders and open access customers, particularly where open access conditions are embedded in licences.

To address disputes, the framework provides a two-tier grievance redress mechanism. Complaints related to open access can first be filed with a grievance resolution committee. If parties remain dissatisfied with the committee’s decision, they may approach the Electricity Regulatory Commission for formal dispute resolution.

The directive covers both preparatory and implementation aspects of open access. It acknowledges that additional subsidiary guidelines may be required from the commission, while central agencies will need to develop operational manuals and draft open access agreements. Transmission and distribution licence holders will also be required to complete metering and related technical works to enable practical implementation.

Implications for private sector and power trade

The introduction of open access is widely regarded as a milestone in the evolution of any country’s electricity sector. In Nepal’s context, it is expected to pave the way for greater private sector participation in transmission and distribution infrastructure development, as the directive provides commercial clarity on cost recovery and usage charges for network assets.

The framework also expands options for power producers by allowing them to directly identify buyers and sell electricity through the grid, rather than relying solely on a single buyer model. This is particularly relevant as Nepal’s private sector has been seeking a more active role in electricity trading.

Importantly, the directive provides a regulatory basis for using available capacity in transmission infrastructure owned by licensed entities to facilitate domestic and cross-border electricity trade. This is expected to support Nepal’s ambitions to export surplus electricity to regional markets, while also deepening competition and efficiency within the domestic power market.

With the issuance of the Open Access Directive, Nepal’s power sector enters a new regulatory phase, shifting gradually from a vertically dominated structure toward a more open, market-oriented electricity system.