Public hearing raises legality on Umeme’s monthly service fees

Thursday August 22 2019

Requirement. The service charge, according to

Requirement. The service charge, according to ERA is a revenue requirement for generating power. FILE PHOTO  

By Christine Kasemiire

A member of the public has raised concern on the need for Ugandans to pay monthly service fees when paying electricity bills.
While at the second public hearing organised by Electricity Regulatory Authority (ERA) to discuss Umeme’s performance parameters, Mr David Mugisha, an energy researcher and economist said monthly service charges are illegal.
“It is my contention that monthly service fee is illegal and should never have been charged beyond 18 months after the concession started and anything that it does should be under distribution, maintenance and operation costs,” he said adding that Umeme is collecting a lot of money and should be stopped.

Charges per user category
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 industrial package incur Shs70,000.
The monthly service fixed charge is a mandatory payment carried forward in case a customer postpones recharging during a particular month.
In response to his contention, Ms Ziria Tibalwa, the ERA chief executive officer, said in the spirit of transparency of the tariff determination, the regulator reveals the cost break down of the tariff.
She clarified however, that the money is not kept by Umeme.
“I take note of the burden of looking at your Payway receipt and seeing the cost breakdown. But the question is do we want it to be detailed or summarised? Otherwise, it is not money kept by Umeme. It is money collected as part of the revenue requirement by the sector to deliver the electrons from where they are generated to our premises,” she said, adding the system is best practice that has been derived from bench marking other countries.

Performance targets
The discussion sought to give Umeme an opportunity to justify why it is requesting for additional resources to operate their last leg of the 20 year concession.
ERA, had in April set performance targets for the power distributor, which included distribution, maintance and operation costs for the period 2019-2025.
The approved targets were half of what Umeme had proposed for the period, which the regulator said seeks to promote efficiency and a sustainable tariff plan for the public.
However, Umeme in May appealed the targets, saying it needed more resources premised on the free electricity connections policy which requires the power distributor to connect 300,000 customers annually from 80,000.
“Now that we are adding 200,000 more customers, we need the technology, the technicians, motorcycles, vehicles and all related equipment so we can scale up our operations. We cannot deliver more connections with limited resources,” Mr Selestino Babungi, Umeme managing director said.

Charge
Monthly fee per user category:
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 industrial package incur Shs70,000.

Delayed connections
Umeme as at 2018 had 1.3m customers connected to the main grid. ECP, the government policy aimed at increasing access to electricity to 60 per cent by 2027. However, the donor funded project has met some challenges in only its first year of implementation.
Mr Mugisha noted that despite applying for electricity, no strides had been made in connections. Notably, Ms Tibalwa said challenges have been resolved and works are expected to resume.

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