Umeme wants service fees reviewed upwards
Changes: Umeme wants monthly service charges for power consumers revised to reflect changes in the macro economic environment. FILE PHOTO
What you need to know:
Changing environment. According to Umeme, the current service charges were last reviewed seven years ago yet the macro economic environment has been changing.
Power distributor, Umeme is requesting for a review of monthly service fees charged to electricity consumers.
According to a report released by the regulator last year, Umeme noted that the current monthly service charges set by Electricity Regulatory Authority (ERA) may not be reflective of the macroeconomic conditions in the country today.
“During the 2019 Tariff Application, Umeme indicated that the current monthly service fees may not reflect changes in the macroeconomic variables,” the report reads in part, explaining that the last adjustment was made in 2012 when the country stopped subsidising the sector.
Currently, according to African Vending Systems, the provider of Payway Services, the domestic and commercial customers incur fixed monthly charges of Shs3,360 per month while medium industrialists pay Shs22,400 and large industrialists incur Shs70,000.
The fixed service charge is a mandatory monthly payment included in a consumer’s bill and is carried forward in case one postpones recharging during a particular month.
Calculations based on the current rates indicate that a domestic consumer incurs Shs40,320 annually on monthly fixed charges while medium industrialists fork out Shs268,800 for the same period.
Large industrialists who contribute the bulk collections to fixed charges spend Shs840,000 annually on fixed monthly fees.
However, ERA in a report noted that since Umeme had not submitted proposals for adjustment of the monthly service fees including the underlying assumptions and justifications for consideration, the regulator sanctioned a cost of service study.
“ERA is undertaking a cost of service study that is expected to inform the reasonable levels of the monthly service charges per electricity consumer category,” the report reads in part revealing that pending conclusion of the cost of service study, the monthly service charges last year remained unchanged.
Mr Blessing Nshaho, the Umeme chief corporate and regulatory officer, told Daily Monitor there are proposals of new service charges at the moment pending ERA research.
“The service charge was determined using macroeconomic variables that were considered in 2012 that was 7 years ago. These variables may have changed considering the growth in the economy,” he said.
Monitoring
Umeme, according to Mr Nshaho, had hoped that ERA would through its economic regulation directorate continuously monitor the macroeconomic factors affecting the various elements of the electricity tariffs and develop proposals for discussion within the sector for its tariff application.
The cost of service study which will determine the fate of monthly service fees is expected to be released this year.
