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Electricity tariff increase looms

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Electricity tariff increase looms

The Herald

ArrowHerald Reporter—
AS the nation braces for the engagement of emergency power suppliers and additional power imports, the Zimbabwe Electricity Transmission and Distribution Company (ZETDC) and Zimbabwe Power Company have applied to the Zimbabwe Energy Regulatory Authority (ZERA) seeking to increase electricity tariffs next year. In a statement yesterday, ZETDC said it intended to increase electricity tariffs from the current level of $9,86 per kilowatt per hour with energy experts hinting that use of emergency diesel power generators could push the cost of power to as high as 14c/kWh.

This comes against the backdrop of power supply woes that have frustrated efforts to resuscitate industries, with water levels at Kariba expected to further deteriorate in 2016 thereby reducing output by a further 200 megawatts (MW).

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ZETDC said if awarded the increases, consumers would in return enjoy improved electricity availability and higher security of supply, reduced load-shedding, improved service delivery and improved investor confidence and higher economic activity.

“The application is seeking an increase of electricity tariffs from the average current level of $9,86/kWh. “The tariff is derived using the approved Rate of Return (ROR) methodology provided in section 52 of the Electricity Act. The methodology was approved by Government in 2004.

“ZETDC intends to procure 200MW capacity from emergency power sources to cover the shortfall due to low supply from the Kariba Power Station owing to low water levels. ZETDC also intends to procure additional power from both local and regional power producers to complement local supplies. The purpose of the proposed tariff is to cover the increased costs of importing power and additional imports to maintain supply at current levels and avoid shrinking the economy,” read the statement.

ZERA confirmed receipt of applications from ZETDC and ZPC. The authority said the applications to review tariffs did not imply the applications had been approved by ZERA. “ZERA will conduct due diligence on the tariff review applications and interrogate the costs of ZPC and ZETDC to ensure that the required tariffs are justified.

“In line with provisions of subsection 10 of section 53 of the Electricity Act (Chapter 13:19), ZETDC will be publishing a notice in the national newspapers advising of their intention to vary electricity tariffs as well as requesting consumers to make submissions to ZERA on the tariff application,” said ZERA.

The authority said it would conduct stakeholder consultations on the tariff review applications with stakeholders representing various customer categories in January to get views on the application. Some of the consumer groups that will be contacted include the Consumer Council of Zimbabwe, residents associations, farmers unions, Confederation of Zimbabwe Industries, Zimbabwe National Chamber of Commerce and Chamber of Mines among others.

ZERA said it would also confer with the Minister of Energy and Power Development as required by Subsection 1 of Section 53 of the Electricity Act (Chapter 13:19) and make a determination on the levels of tarrifs to be awarded to ZPC and ZETDC on the basis of results of the due diligence exercise as well as the oral and written views from all stakeholders.

Government has enlisted three foreign companies for the installation of an emergency diesel power plant at Dema substation in Seke as it moves in to ameliorate power shortages bedeviling the country. The emergency power plant, being introduced as a stop-gap measure while big power generating projects materialise, is expected to provide 200 megawatts to the national grid.

Installation of the plant will be done at the Dema sub-station and should be complete by February next year. Following Cabinet’s decision that a 200MW emergency diesel power plant be established at Dema substation, Seke, a technical committee was constituted to spearhead the project.

The emergency plants are expensive to run and the Ministry of Energy and Power Development has already warned that beginning February, Zimbabweans have to embrace significant power tariff increases to reduce the load-shedding hours. The ministry said every household had to be on either a prepaid meter or a smart meter.

Indications are that Government wants to rope in a foreign company to install smart meters on all outstanding points. Consumers are being levied about 9,86c/kWh and the use of diesel generators is likely to see cost moving to 14c/kWh.

The Dema emergency plant will later be complemented by the 120MW that will come from the Mutare Peaking Power Plant, which will take just under 18 months to complete.

The plant is one of the priority projects targeted under Zim-Asset and Zesa engineers have done due diligence on Ansaldo Energia, the Italian company that will supply the contractor, Helcraw Electrical (Pvt) Ltd, with equipment.

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