ECB CEO Robert Kahimise
The Electricity Control Board (ECB) has given 37 electricity distribution licensees that have not yet applied for the review of their tariffs to do so by the end of July, 2023, failure to which the regulator will be forced to review using its own available data for each licensee and issue revised tariffs by end August 2023.
Only six distributors – Erongo RED, CENORED, NamPower Distribution, NORED, Omaheke Regional Council and Okahandja municipality – applied for tariff review on time (before end May 2023).
City of Windhoek, Kalkrand Village Council, Keetmanshoop Municipality, Mariental Municipality, Osire Power, Oshakati Premier Electric and RoshSkor Township applied after the end June 2023, and the review of their tariffs is ongoing.
ECB Chief Executive Officer, Robert Kahimise, took issue with the distributors who have not yet applied for review.
“It is very disheartening that we have to do their work. If applications are not received by the end of July, we will review them using our available data for each licensee and issue revised tariffs by the end of August,” he said.
All licensees are required to implement tariffs as approved by the ECB.
In May 2023, the ECB announced an increase of 8,97% for NamPower’s bulk electricity tariff (inclusive of generation and transmission), resulting in an increase from an average N$1,82 per kilowatt-hour (kWh) to N$1,99 per kilo watt-hour for the financial period 2023/2024, effective 1 July 2023.
The NamPower tariff increase announced in May 2023 is an average increase and will only impact 70% of the distribution costs while 30% is costs related to the different licensees. Tariff application by the distribution licensees are mainly be linked to operational efficiencies of the specific licensee including the level of cost reflectivity of their tariffs.
The approved tariff is applicable to NamPower bulk customers (i.e., Regional Electricity Distributors, Local Authorities, Regional Councils and Mines). In accordance with the legal provisions about 50 distribution utilities including REDS, Local Authorities, Regional Councils and Farmer Schemes are required to apply to the ECB for a review of their distribution tariffs, which when approved will be applicable to end consumers effective 1 July 2023.
“All distribution utilities were urged and formally requested to apply for their annual tariff reviews before end May 2023. Utilities that do not apply for tariff adjustments in time to coincide with the implementation of the bulk tariffs which is effective 1 July 2023, will lose revenue because they will be selling electricity based on outdated tariffs while purchasing on new tariffs, especially pre-paid revenue that is collected through pre-paid sales,” Kahimise said.
He said such practice by distribution utilities was not financially sustainable and it affects their financial ability to honour NamPower’s bills, it further affects service delivery.
In reviewing the tariff, the ECB considers several factors, including the impact of the tariffs on the Electricity Supply Industry, consumers, and the economy at large. In particular, the current economic climate is considered.
The ECB said it was cognisant that prices of goods and services have been increasing, which negatively affect consumers. Equally important, is that the applicable tariffs are reflective of the cost of providing electricity.
“The ECB is cognisant of the fact that the economy is depressed but is equally dependent on reliable and affordable electricity supply. It is, therefore, the responsibility of the regulator to ensure a sustainable electricity industry at affordable tariffs,” Kahimise said.