Electricity tariffs up 19pc
Mutsawashe Mashandure–Herald Correspondent
The Zimbabwe Energy Regulatory Authority (ZERA) has granted the request by distributor, Zimbabwe Electricity Transmission and Distribution Company (ZETDC), for a tariff increase of 2 US cents a kilowatt hour, a rise of just under 19 percent for domestic consumers, but retaining the discounts for residential users with low demand.
The most common household token of 250 kilowatt hours a month will now cost US$31, converted at the interbank rate on the day of purchase.
ZETDC has been facing rising costs. With reduced Zambezi River flows, followed by tighter water rations by the Zambezi River Authority for the two Kariba power stations and thus lower output, plus the commissioning of the two new 300MW units at Hwange Thermal, around two thirds or more of ZETDC power supplies come from Hwange.
Thermal power is intrinsically more costly than hydro power as coal has to be mined, moved and burned to raise steam to spin turbines, while a hydro station just turns a valve to allow free water to accelerate down a shaft to the turbines.
At the same time there are the capital costs of servicing the loans raised to extend Hwange Thermal, although capital costs were fed into the calculations for the previous tariff.
ZETDC has also raised the need for revenue to replace worn, stolen and vandalised transmission equipment, such as transformers.
When granting the increase Zera made it very clear that it expected ZETDC to maximise operational efficiency and collect on time all money it was owed.
Major industrial and mining consumers, plus some large commercial users, can pay in arrears and so can allow what they owe to build up while the overwhelming bulk of residential and small business users are on pre-paid meters and have to pay up-front so they never owe anything.
Zera wants to see everyone on pre-paid power, which requires smart metering for the major consumers who pay most of their bills on their maximum demand for power, rather than paying entirely for energy as smaller consumers do.
Under the Electricity Act ZETDC has to have any tariff rises approved by Zera, the independent regulator set up to ensure that an effective monopoly supplier can justify its tariffs before people pay.
Speaking yesterday during at a press conference, Zera chairperson Dr David Madzikanda said they agreed that a power tariff increase had become necessary to improve service delivery.
“Reasons for approving electricity tariff review: to enable the utility to raise the revenue required for service provision in 2023, to cover costs for purchase of electricity, operations and maintenance, regulatory costs, research and development costs and general Administration to take into consideration adjustment for under recovery in the previous year,” he said.
“To create capacity to be able to support economic growth in the mining, agriculture, industrial and tourism sectors, the magnitude of the tariff adjustment being applied for in the interim is an increase of USc2/kWh on the existing tariff.”
But Dr Madzikanda said Zera insisted that internal measures were taken to improve revenue collection and reduce system losses listing these as improved efficiency, revenue collection and reduced system losses; completion of prepaid metering programme, installation of smart meters and migration of medium and large power users to prepayment; and completion of statistical metering to enable load balancing.
Other measures will include “automation of manual processes to improve efficiency, network reinforcement and rehabilitation, decommissioning and repurposing of the small thermals and conclusion of the construction of transmission lines and substations for purposes of transmitting the extra 600MW from Hwange 7 and 8.
Mr Madzikanda urged consumers to pay their bills in full and on time and must assist in looking after the electricity infrastructure.
He also urged the media to assist in ensuring that the utility is supported to attain cost reflectivity.
“The media should educate and bring awareness to the public on the importance of looking after the electricity infrastructure,” he added.
While the increase sees a jump of 19 percent in costs for domestic users, the percentage increases vary across the customer base depending on what tariff they use and how efficiently they use their electricity to avoid higher tariff extras, according to ZETDC.
Before the recent approval, ZETDC was charging a weighted average of US11,28c/kWh, that is the average of US10,63c/kWh for non-exporting customers and US12,21c/kWh for exporting customers.
The recent tariff award adjustment translated to a weighted average of US13,28c/kWh for all customers.
Due to the different voltage levels and tariff structures, the customers would see different averages. The new tariffs are available on the ZETDC website.
For domestic customers the lifeline units meant for the vulnerable group, which are the first 50 units, will now cost the Zimbabwe dollar equivalent of US$3,45 whilst the 250 units that are normally consumed by an average household in urban areas will cost the Zimbabwe dollar equivalent of US$31.
Those consuming around 400 units will see an average cost equivalent to US$61.
High domestic consumers with heavy gadgets and equipment such as boreholes and Jacuzzis with an average usage of 750 units will pay the Zimbabwe dollar equivalent of US$140.
With the extra revenue, ZETDC is expected to address the outstanding maintenance of the transmission and distribution network that was resulting in numerous faults and improve power reliability.
The utility would be capacitated to procure critical spares, tools and equipment for maintenance.
ZETDC agrees that it must improve on its levels of efficiency so that the customers realise the benefit of the tariff adjustment.