The government is planning to redefine the concept of electricity load shedding by modifying the Nepra Act and Performance Standards. This move aims to legalize revenue-based load shedding across the country under the guise of Aggregate Technical and Commercial (AT&C) losses, which has been a long-standing desire of the Power Division.

According to the Power Division, the government is continuously working to address the multifarious challenges in the country’s power sector. The increasing trend of circular debt is making the sector and the economy financially unviable.

The Power Division cited that major reasons for the growing circular debt, including high line losses, low recovery rates, and electricity theft. Distribution companies carry out revenue-based load shedding in areas with high line losses. Additionally, the sharp increase in power prices for the central pool has made it economically and financially imprudent to purchase such costly electricity for delivery to consumers.

The Power Division argued that due to economic compulsions, a well-structured load shedding is the only feasible solution to ensure the viability of the power sector. However, Nepra and other legal forums have discussed economic load-shedding policies and implementation, highlighting the need to bring load-shedding due to economic or revenue compulsions into the legal framework.

They have advised incorporating certain amendments in the Regulation of Generation, Transmission and Distribution of Electric Power Act, 1997 (the “Nepra Act”) to create a robust regulatory framework for this purpose.

In a series of meetings held on 15, 18, and 25 April 2024 to deliberated on power sector reforms, the Prime Minister directed the Power Division to review and propose amendments to the existing legal and policy frameworks regarding Policy and Aggregate Technical and Commercial (AT&C) based load management in the country.

To initiate these legal, policy, and regulatory changes, the Power Division has notified a committee comprising members from PPIB, CPPA, Law Division, Nepra, and independent legal and regulatory experts. The committee has conducted a comprehensive review of the existing arrangements, examined the provisions of the Constitution and Acts, as well as the economic, technical, and commercial aspects of the policy measures on economic load shedding and distribution license obligations, which have deteriorated and exceeded the federal government’s obligations.

The committee has reviewed the existing provisions, including Section 34 of the Nepra Act, the definition under 4 (f) of the Performance Standards Rules of 2005, the terms and conditions of distribution licensees, various judgments of superior courts, the National Electricity Policy 2021, strategic directive 5(b) of the National Electricity Plan, and the Nepra advisory to Distribution Companies (Discos) of February 2022.

The committee submitted its detailed report on July 31, 2024, for consideration and approval by the competent forum. The committee has proposed amendments not only to the Nepra Act (and has drafted a bill along with the statement of objectives for Parliament) but also to the Nepra Performance Standards (Distribution) Rules 2005.

The Power Division has endorsed the recommendations in the report, considering them critical for the power sector, and recommends their immediate implementation.

Based on the recommendations and amendments proposed in the Nepra Act and Rules, the Cabinet Committee on Disposal of Legislative Cases (CCLC) has been requested to review and recommend the amendments for approval by the Cabinet, for onward consideration by the Parliament.

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The proposed amendments to the Nepra Act include the insertion of the following definition in section 2, clause VII-A, of the Regulation of Generation, Transmission and Distribution of Electric Power Act (Nepra Act) XL of 1997, as amended: “load shedding means the process of removing, either manually or automatically, the consumers’ load from the power system under intimation/ publication in advance, planned due to technical, commercial, and economic considerations as approved by Authority from time to time.”

The committee has also recommended the following amendment to sub-section V of Section 34 of the Regulation of Generation, Transmission and Distribution of Electric Power Act (NEPRA Act) XL of 1997: “(v) principles and priorities of load shedding provided; however, where load shedding is necessitated due to economic constraints, the federal government may from time to time issue policy guidelines which shall be binding on the Authority and licensee(s); provided further that in the formulation of such policy guidelines, the federal government shall be guided by the principles of equality and non-discrimination among the various classes of consumers.”

As the proposed amendments to the Nepra Act and Performance Standards are cleared from the Cabinet Committee on Disposal of Legislative Cases (CCLC) and subsequently from the Federal Cabinet, they will be tabled before the National Assembly and Senate for final approval.

Nepra and NTDC have expressed their views on the proposed amendments regarding revenue-based load shedding.