5 pc cap on tariff hike was only for inflation: ETFC

KATHMANDU, Feb 1:The Electricity Tariff Fixation Commission (ETFC) is set to respond to the Supreme Court´s pre-emptive interim order prohibiting it from raising the power tariff by more than 5 percent. ETFC is arguing that the Electricity Tariff Fixation Rules 1994 refers to a formula for a sort of annual inflationary adjustment while bringing in the 5 percent cap.



A single bench of Justice Sushila Karki had issued the interim order on January 10 saying that preparations by ETFC to raise tariff by 20 percent is illegal as it runs counter to the Electricity Tariff Fixation Rules 1994 that allows a hike of just 5 percent in a year. ETFC Chairman Ganesh Prasad Subba argued that the 5-percent provision was related to adjustment of tariff to the changes in cost of the fuel used in electricity generation or to changes in the consumer price index. [break]



“…In case the cost of fuel to be used in the production of electricity or the consumer price index changes, the commission shall change the tariff rate in proportion under a formula that takes into account the change in cost of fuel and the consumer price index…. While making changes in the electricity tariff, the commission may change it not exceeding 5 percent of the prevailing electricity tariff and only once a year,” the Electricity Tariff Fixation Rules 1994 states in its Procedures Relating to Fixation of Tariff and Other Charges.





Chairman Subba said the ETFC response also argues that the order cannot be issued when ETFC has not raised the tariff. “We have completed writing out the response and will send it through the Office of the Attorney General,” said Subba, adding that ETFC was also preparing to file a petition to vacate the interim order. The Consumer Rights Protection Forum (CRPF) had filed a quo warranto petition on the basis of the Electricity Tariff Fixation Rules 1994, amidst reports that ETFC was going to raise tariff by around 20 percent.





The current tariff of Nepal Electricity Authority (NEA) has been in effect since September 17, 2001 and Subba disclosed that the NEA response also refers to this fact. ETFC was preparing to raise the tariff from Falgun (mid-February) when the apex court issued the interim order. Prime Minister Dr Baburam Bhattarai had agreed in principle to raise electricity tariff during a meeting with ETFC members on December 21.

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