6.15.1 The following institutional arrangements shall be made for the development of hydropower.
(1) Regulatory body:
The existing Electricity Tariff Fixation Commission shall be developed as a regulatory body. In the course of monitoring and supervising the quality standards of electricity, this regulatory body may give direction and make supervision as per necessity, also taking into account of the power purchase agreements of the public and the private sector producers.
(a) The functions of the regulatory body shall be as follows:
• To fix electricity tariff and wheeling tariff,
• To monitor and supervise the safety of the electric system, and the reliability of supply and
(b) the hydropower center may be purchased and sold with the mutual understanding between the generator and the purchaser. Prior to concluding the power purchase agreement, the basis for fixation of the rate of sale and purchase of electricity shall require a review from the regulatory body. The regulatory body shall review and render opinion no later than 45 days of the receipt of request for review. The review of the power purchase agreement made by the regulatory body shall be taken as the basis for purposes of fixation of electricity tariff.
(c) The regulatory body shall fix the rate of electricity tariff to be sold and distributed to the consumers. In fixing the electricity tariff, the interest of the consumer shall also be taken into account.
(2) Study and Promotional Body:
(a) The Department of Electricity Development shall carry out the following functions:
• To conduct competition in the course of issuing the license,
• To provide facilities available under the one window policy and to attract the private sector in the development of hydropower,
• To encourage private participation in the hydropower projects,
• To carry out acts related to the approval of the hydropower projects with a capacity of more than one MW to utilize and cause to utilize the water resources optimally.
• To carry out feasibility studies of the hydropower projects and study works of multi-purpose projects.
• To render necessary assistance to the private sector in the operation of the projects and carry out monitoring and promotional works.
(b) The Water and Energy Commission shall carry out the following functions:
• To carry out acts related to national load forecast for electricity and system planning study.
• To carry out acts related to preliminary identification of hydropower projects.
• To conduct various policy research works for electricity development
(3) Electric Energy Management Research Institute:
An electric energy management research institute shall be developed in order to carry out study and research on financial, legal, environmental and technical aspects of electricity and to provide training thereon.
6.15.2 The functions pertaining to the operation of the power centers, operation of electricity transmission and national grid, and electricity distribution owned by the Nepal Electricity Authority shall be gradually unbundled, and appropriate institutional arrangement shall be made therefor. An autonomous public body shall be entrusted the responsibility for operation of the national grid. The local body, community/cooperative body and private sector shall be encouraged in the operation of electricity distribution system.