ERA increases electricity tariffs

KAMPALA. Domestic, commercial, medium and large industrial consumers of electricity will pay averagely Shs31 more for power they consume this quarter.
The domestic consumers will pay Shs52.6, commercial users Shs39.4, medium industries Shs23.8, large industries Shs9.4 more whereas each unit used for street lighting will cost Shs51.3 more.
For domestic consumers, the new rate applies to each unit after the 15th. Each of the first 15 costs Shs250, up from Shs150.
Domestic consumers will now pay 771.1 up from Shs718.5 per unit.

Commercial consumers will pay Shs687, up from Shs647.6, medium industries Shs615.3 up from Shs591.5 per unit while the large industrial consumers will pay Shs383.8, up from Shs374.4 per unit
The winners are the extra-large industrial consumers – 39 in number – whose retail tariff has decreased by Shs55.4 on account of rolling out the benefit of refinancing Bujagali hydropower plant.

Depreciation Shilling
These adjustments, according to the Electricity Regulatory Authority (ERA), are informed by the depreciation of the Uganda Shilling against the US Dollar – by 3.5 per cent and the increase in the price of crude oil by 22 per cent per barrel.
The shilling’s depreciation against the dollar is attributable to the increase in demand for the latter while in the case of crude oil, it is as a result of the cuts in production by the Organisation of Petroleum Exporting Countries and Russia, ostensibly to nudge the prices upwards.
Some of the inputs such as transformers, electrical substation components and even cables used by power utilities are not manufactured in Uganda.
The utilities use US dollars to import them.

In other cases, the money used to construct the power plants was borrowed from external financers such as Export Import Bank of China.
The money spent on equipment or borrowed from international lenders and invested in the electricity sector is recovered through the retail tariff.
President Museveni, who in the past used to argue that retail tariffs should be “managed politically”, has since changed tune; he these days vouches for a reduction of the tariff for the extra-large industrial consumers – to five US cents (Shs190) to lower costs of production.

The extra-large industries, which, according to ERA, consume 25 per cent of the electricity distributed in Uganda, are mainly in cement, steel, textile, plastic, beer and soda manufacturing.
Mr Museveni has on several occasions said he does not mind if the retail tariff for domestic users increases because households do not use electricity for production.

When the Daily Monitor on Tuesday contacted the executive director of the Uganda Manufacturers Association, Mr Daniel Birungi, for comment, he said the association will today engage ERA on the subject.
“Out of that engagement with the ERA, there will be a substantive response by UMA,” Mr Birungi said.
Separately, Uganda’s main power distribution company said for the new power generation coming on board, it will be important to focus on the larger industrial concerns.

“We need big industries to take up this power. Uganda needs to model its new generation around industrial and commercial consumers that will lead to job creation and economic development which puts money in the pockets of households,” said the Umeme manager of communication and media relations, Mr Stephen Ilungole, said on Tuesday.

“As Umeme, we are equally concerned about the end user tariffs. Our desire is to have lower tariffs to make electricity more affordable to all Ugandans. On our side, we are doing this through reducing energy losses, connecting new customers and continuous improvement in our distribution infrastructure network,” he said.

According to ERA, Uganda has an installed generation capacity of 932 megawatts (MW), effective supply capacity is 640MW and peak demand is 568MW. That means Uganda is consuming less than its installed or firm generation capacity.
But since the agreements signed with many of the Independent Power Producers provide that whether Uganda takes their power or not it must pay for their power, the retail price of power seldom reduces.

Seven MW out of the 640MW that is generated is from the Electro-maxx and Jacobsen thermal power plants in Tororo and Kampala respectively.
Peak demand is 568MW, according to the Uganda Electricity Transmission Company Limited, the utility which buys and sells bulk electricity.
The last increment was in December 2017, when ERA increased the base tariff for 2018 from Shs696.9 to Shs718.9.
The last increment was in December 2017, when ERA increased the base tariff for 2018 from Shs696.9 to Shs718.9.

The increment of the base tariff then led to the increase in the end-user tariff for the domestic users from Shs685.6 to Shs718.9 and that for commercial use from Shs619.1 to Shs648.3 per unit.
End-user tariff for medium industrial consumers increased from Shs568 to Shs592.5, that of large industrial users increased from Shs368.1 to Shs375.5 and extra-large consumers from Shs364.6 to Shs371.1 per unit.

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