NEA Readiness Assessment And ERC Support Assessment 30 th December 2019 Outreach Event- Delhi, India 1
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NEA Readiness Assessment And
ERC Support Assessment
30th December 2019
Outreach Event- Delhi, India
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• MCC and the Government of Nepal entered into a Compact to help facilitate
poverty reduction through economic growth in the amount of $500 million USD.
• The Millennium Challenge Account-Nepal (MCA-Nepal) has been established as
the legal and accountable entity in Nepal.
• As such, MCA-Nepal is responsible for implementation of the Compact.
• MCA-Nepal will procure all goods, works, and services funded under the
Compact using the MCC Program Procurement Guidelines, and will enter into
contracts and administer all such contracts.
• All program disbursements must be made within five years of entry- into-force
(EIF) of the Compact, which is scheduled for June 2020. (July 2020 to June end
2025)
Reducing Poverty Through Growth12/27/2019 2
The overall objective of the MCC Compact with Nepal is“To increase domestic consumption of electricity and to support increased
regional power trade.”
Objective of Electricity Transmission Project (ETP) is “To increase domestic electricity supply for consumption by improving the
availability and reliability of electricity in Nepal’s electricity grid.”
Components of ETP:
• Transmission Line Activity
• Substation Activity
• Power Sector Technical Assistance Activity
• Program Management and Technical Oversight Activity
Outcomes:
•Add 3,920 MW Tx capacity; reduce losses to
1.9%
•Support 3x increase in electricity consumption
per capita Approx. 312 km – 400 kV Tx lines
(~850 towers)
3 x 400 kV substations
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The Parties will perform their responsibilities under this Agreement in accordance with the following documents, as amended from time to time (collectively, the “Key Documents”):
1. the Compact (US Government Grant Agreement);
2. the Program Implementation Agreement – addendum to the Compact;
3. the MCC Cost Principles for Government Affiliates Involved in Compact Implementation;
4. the MCC Program Procurement Guidelines.
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MCC Technical Directive Nepal-01:
Directives to assess needs for effective operation of newly formed ERC and NEA’s
readiness and ability to respond
MCC Technical Directive Nepal-11:
Directives to assess gaps and areas for TA to NEA including its Environment and Social
Studies Department (ESSD)
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Aim of the Activity is to Support the Electricity Regulatory Commission (ERC) and Nepal Electricity Authority (NEA)
Project For ERC/NEA- Directive 1 Analyze risks and opportunities to the Nepal Electricity Authority (NEA) presented by the
establishment of an Energy Regulatory Commission (ERC) and assess NEA readiness and ability to
respond.
Support efforts to pre-position Compact to move forward with support to the ERC once
operationalized.
Project For NEA-Directive 11 Helping NEA for improvement in transmission line business in the areas of regulatory cost recovery
and improved grid operation
Training in system and market operation
Financial Management for transmission transactions and assets
Targeted human resources policies and job clarifications7
Activity to Support ERC and NEA, MCA is performing NeedsAssessment
Activities:
Consultations with ERC and NEA has been completed
Joint high level workshop with NEA officials, ERC, Line Ministry & Bilateral Organization was completed
Draft report has been circulated to NEA for their comments and observations.
MCA- Nepal is planning to proceed the procurement process after receiving the final report from the consultant.
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To provide Technical Assistance (TA) to Nepal Electricity Authority (NEA)MCA is performing Needs Assessment
Activities:
Task 1: Technical Assistance to NEA
Consultations with NEA has been completed
Joint high level workshop with NEA officials, ERC, Line Ministry & Bilateral Organization was
completedMCA- Nepal is planning to proceed the procurement process after receiving the final report
from consultant.
Task 2 Sub-Transmission System Modeling and System Protection
Spatial load forecast, Sub-transmission expansion plan and system protection coordination study
is ongoing
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• Foundation Phase Activities
• Advance Phase Activities
Note: Study is still ongoing and presented activities are based on the draft phase
of the study. Activities may change / modify in the final phase of the Study.
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• Professional and organizational development (capacity building) for Members and senior staff, including,
• Assistance with the further development and implementation of the ERC’s Strategic and
Organizational Plans.
• Service as embedded regulatory expert advisor to Members pending the development of expert
advisors on ERC staff.
• Exposure to regional regulators; membership in regional regulatory organizations;
reciprocal visits with regional regulators. Initial focus will be visits to jurisdictions with
vertically integrated utilities similar to NEA, both successful and not.• Publication, subscriptions and organizational memberships.• Attendance at relevant conferences.
• Support for establishing foundational documents at ERC• Rules of practice and procedure.• Costing and Pricing By-laws, Directives and Cost Models.• Additional substantive rules as needed.
• Hardware and software for basic cost of service models for generation, transmission, distribution
and trading licensees available to Finance, Engineering and Economic staff.13
• Infrastructure• ERC Regulatory Information Management System (RIMS).
• Docketing system and Document Management System (DMS).
• Website with electronic filing and reporting, consumer information, access to DMS.
• Hardware/software needs of permanent staff.
• Basic training for employees• Training in regulatory theory and practice for each discipline.
• Training on elements of a tariff filing.
• Training in embedded and marginal cost theories.
• Training on elements of tariff design and evaluation for Generation, Transmission, and Distribution services.
• Establishment of internal training protocols for on boarding new employees; developing in-house trainers.
• Site visits to generation, transmission and distribution facilities.
• International training visits, including travel to jurisdictions that are developing competitive wholesale or retail markets
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• Support in Technical Areas
• Training in basic transmission and distribution grid planning and operations
• Training in technical areas required to evaluate proposed technical codes; support in
designing and evaluating the grid code, other technical codes and cross border
regulations.
• MCA Consultant to assist ERC staff on evaluation of technical filings, including
reliability measures, interconnection standards and similar technical matters.
• Training on the functioning of competitive wholesale electricity markets, transmission
open access regimes, financial transmission rights, compensation for wheeling, etc.
• Training on Open Access and Transmission Charges.
• Training on Cross Border Electricity Trade
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• Management Function
• Assist in developing a system for evaluating employee performance; develop performance indicators; train supervising employees on employee performance evaluations.
• Formalize “3-tier” decision-making process; designate advisory staff and assist in their development.
• Supervise/manage staff of combined interim and permanent employees; advise the Commission Secretary.
• Advisory Function
• Senior MCA Consultant develops and manages team of advisors to fulfill the second tier of the decision-making process.
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• Professional and Organizational Development
• Advanced regulatory training in U.S. for Members.
• Annual commission-wide planning retreats.
• Participation in NARUC Commission international exchange program.
• Commission Information Meetings (CIMs) with industry/consumer presentations.
• Advanced training for permanent staff
• PURC/World Bank training at University of Florida or similar opportunities.
• Ongoing in-house training on advanced technical and financial topics using expert
consultants.
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• Additional Infrastructure• Provision of office automation system (IT-based workstations) in new offices, including
software/hardware/server and other necessary office logistics.• Pickup van and vehicles for ERC members and staff.• E-Court and E-Hearings capability.
• Guidance and capacity building for advanced topics; consultant-led in-house training modules on:• Systematic approaches to reviewing utility filings.• Tariff modeling and analysis.• Open access transmission; developments of rules and tariffs.• Least cost planning• Training on theory of least cost planning• Training on system expansion software• Competitive bidding for IPPs.• Performance-based regulation.• Mitigation of market power with tools such as divestiture and pricing limits.
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• Management Functions
• Support and assist the develop permanent management staff, including
preparation of Terms of Reference and Position Descriptions for use in
recruitment.
• Advise Members on legislative proposals
• Training on E-court and E-hearing system.
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Technical Assistance
CategoryIllustrative Activities
Regulatory Readiness
Work with NEA management to design a regulatory compliance unit.
Create job descriptions and/or terms of reference for personnel in the regulatory unit.
Recruit or supply regulatory specialists to staff regulatory unit
Support consultant to train and advise regulatory unit staff.
Establish liaison to engage with ERC members and staff.
Regulatory Accounting Supply consultant with experience in regulatory accounting.
Provide liaison to ERC financial technical staff on accounting requirements
Tariff filing
Embed consultant(s) to assist NEA staff in preparing a tariff filing;
As needed, train NEA staff and assist staff in the preparation of a revenue requirements
study;
As needed, train NEA staff and assist in the preparation of a marginal cost of service
study;
As needed, train NEA staff and assist staff in the preparation of a class cost of service
study;
Provide regulatory legal assistance in preparing application for a revised tariff. 21
Technical Assistance
CategoryIllustrative Activities
Rate design
Fund consultant to produce or assist in producing TOU/Seasonal
studies.
Fund possible international visits to utilities for consultation.
Least cost planning
Fund vendor training on software;
consultant to review load forecast;
assist preparation of plan with sensitivity analyses, as required by
ERC.
Energy Efficiency & Demand
Response
Fund EE and DR capacity study;
Design EE program
Identify all cost-effective measures
Analyze impact on Low and Moderate Income (LMI) customers
Integrate EE and DR into least cost planning effort
Seasonal Costing and Pricing
Studies
Fund engineering consultant to provide marginal cost study with
seasonal analysis.22
Technical Assistance
CategoryIllustrative Activities
Data Analysis
Survey all system and customer data currently collected
Assess quality of data
Research use cases for data
Fund consultant to design data use function within NEA
Fund international exposure to utilities with successful data analytics.
Unbundling
Fund consultant to review progress of functional unbundling and to
prepare plan for full unbundling in advance of the creation of a
competitive wholesale market.
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Activity DescriptionProcure Launch
(Expected)
Embedded Regulatory Advisors
• Up to 4 embedded technical and mgmt. advisors at ERC• Capacity building, analysis, guidance & mentoring
Early-2020
Tariff Study • Developing tariff methodology & guidelines• Assessment of subsidies & affordability
Early/mid-2020
Regulatory Info & Docket Mgmt. Systems
• Development of requirements/specs & scoping• Supply & installation of RIMS & DMS w/training
Mid-2020Early/Mid-2021
Technical Code Development Support
• Development of updated Grid Code, planning code• Training & consultations
Early-2021
Social Equity Integration & Consultation
• Study/analysis of key issues on social equity in electricity sector & integration in regulatory requirements
• Training on stakeholder engagement & social equity issues
TBD
Miscellaneous logistical support
• Basic hardware/software & other operational requirements TBD
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• Establishment of expansion planning & project selection process
• Establishment of competitive bidding process
• Establishment of Market Structure
• Establishment of Power Trade Rules
• Establishment of Open Access/System operation
• Establishment of Least Cost Planning
• Establishment of Document Management System
• Establishment of Rules of Practice & Procedure
• Establishment of Office Automation System
• Establishment of Comprehensive Tariff Study
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• Achieving investment goals in generation and network expansion
• Meeting network capacity requirements
• Improving system reliability
• Improving financial viability
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• Business Operations – Asset Management
• Network Planning
• Network Operation
• Network Maintenance
• Engineering
• Environment & Social Impact Management
• Finance
Note: Study is still ongoing and presented activities are based on the draft phase of the study. Activities may change / modify in the final phase of the Study
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Business Process
Establishing performance measures and management
Adopting the industry standard Asset Management Model
Activities on Asset Management:
• Asset Management Model and Process Implementation
• Asset Management Information System
• Asset Maintenance Improvement Program
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Activities on Network Planning:
• Electricity Demand Forecasting (spatial demand forecasting) and training
• Upgrading of PSS/E facilities at NEA and training
• Capacity Enhancement of Transmission Network Planning and Function
• Restructuring the system planning function to make it efficient
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Activities on System Operation:
• Upgrade of the Grid Code, technical codes for transmission, distribution, interconnection, etc
• Capability Enhancement
Structured training programs on all aspects of maintenance functions to maintain competency level (off-site and on-job)
Health and safety training
Training in System Operations areas for knowledge development
• INPS Protection Coordination Study
• Implementation of Digital Fault Recorder in substations
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Activities on Network Maintenance:
• Enhanced Geographic Information System (GIS) Application
• Aerial-based Maintenance Program Activities for inspections, restoration and commissioning
• Live Line Maintenance Program Activities for OH line and substation
• UAV-based Maintenance Program Inspection and aerial survey
• Mobile Information Technology Platform Information flow and reporting
• Specialized Testing and Measuring Devices Equipment testing, corona testing, real-time line rating and condition monitoring
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Activities are:
• Consolidating project management function for
• Transmission line projects
• Substation projects
• Improving staff technical skills in
• design requirements and engineering of construction projects
• project management, contract & procurement management
• Establishing centralized project data and drawings management
system
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Activities are:
• Improvement of Social and Environmental Policies and Legal Framework
• Environmental and Social Polices and Program
• Corporate Social Responsibility Program
• Project Communication Plan
• Optimization of ESSD structure and role within NEA
• Revision of the ESSD structure and effective
• Establishment of a ESSD mission and system for interaction with other departments
• Improvement of the ESSD team and performance (personnel and equipment)
• Development of methods and tools for ESIA and monitoring of transmission lines
• Development and implementation of a training program
• Development and implementation of a knowledge management system
• Development and implementation of a simplified mechanism to acquire external consulting services
• Upgrade and modernization of equipment used for data collection and study reports 34
Need Recommendation
Implementation of Fully Integrated ERP
System
Identify and support in areas where additional resources and
capacity could be supplement the ongoing ERP implementation
process
Compliance with Accounting Standards Identify and support in areas where resources and capacity could
be provided in compliance with Accounting Standards
Budget Management and Financial
Forecasting
Review and improve financial forecasting, resource planning and
budget management processes with capacity building and
systems
Investment Analysis, Capital Budgeting
and Funding
Organization-wide review; Development of Policies and
Procedures; Implementation of streamlined and up-to-date
techniques
Implementation of Cost-Reflective and
Regulated Tariffs
Provide additional resources and capacity in ongoing tariff
scheme changes and interface with the Regulator
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Activity DescriptionProcure Launch
(Expected)
Asset Management Model
Advisor
• Utility experts for analysis, process review & update, capacity
building to introduce asset mgmt. model
Early-2020
Asset Management Info
System
• Software/info system to support asset mgmt. model at NEA
• Scoping & requirements/specs; supply & install
Mid-2020
Training & equipment to
support Utility
Operational Activities
• Network development including design standards/technology,
environmental/social assessment & monitoring, project &
contract management
• Asset maintenance including condition assessment,
monitoring, live-line maintenance,
Mid/Late-2020
System Planning support • Software upgrades & training
• Process strengthening & capacity building
TBD
System Operations • Protection & control coordination updates
• Substation automation strengthening
• Analysis & updates to scheduling, dispatching, settlement
TBD
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• Increasing pace of investment in required transmission network capacity
• Increasing reliability of the transmission network (availability & quality)
• Increasing financial viability of the power sector
• Increasing efficiency in use of generation resources
• Establishment of Asset Management Model
• Strengthening regulatory & operational framework for power trade
Thank You
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