Reject Zesco tariff hike, urges CUTS

Zesco’s plan to adjust electricity tariffs upwards should be rejected because they will hurt vulnerable households who will face an increased cost of living, says the Consumer Unity Trust Society (CUTS).

Zesco has proposed to hike electricity tariffs for all consumer categories effective at a date to be confirmed by the Energy Regulation Board (ERB) this year.

According to a revised schedule issued by Zesco’s managing director Victor Mundende, the power utility has applied to the ERB for an upward revision of tariffs for all consumer categories in an effort to ensure they are cost reflective.

Part of Zesco’s proposal includes a hiked tariff for metered residential customers who may pay K0.47 per kWh from K0.15 per kWh in the R1 consumption bracket of up to 100kWh, while consumers above 301kWh will be hit with a proposed tariff of K1.94 per kWh, up from K0.89 per kWh.

On the commercial side, Zesco wants consumers in the C1 bracket who consume up to 200kWh to now pay K1.07 per kWh, up from the current K0.54 per kWh, while consumers in the C2 bracket of above 200kWh will be faced with a daunting tariff of K1.85 per kWh compared to the current K0.54 per kWh.

Three other customer categories, which include social services and bulk distribution, also face huge increases by the power utility should the ERB approve their application.

But reacting to Zesco’s application, CUTS Centre Coordinator Chenai Mukumba appealed to the ERB to reject Zesco’s application, and allow the Cost of Service Study to be completed first and ensure that the power utility be restructured to make it more efficient as a means to enable it raise more revenues.

She also bemoaned the potential devastating impact hiked electricity tariffs would have on vulnerable households who could be subjected to paying higher tariffs.

“While the Cost of Service Study has, indeed, been delayed, we are opposed to a revision of prices before this is released as it is imperative to make sure that consumers are not being unfairly penalized for inefficiencies within Zesco. As such, before shifting the burden towards consumers, Zesco should first and foremost look to resizing the structure of the institution to achieve efficiency,” Makumba argued in a statement availed, Monday.

She insisted that Zesco ought to undergo significant internal reforms to achieve the utility’s objective of attaining cost reflective tariffs.

“While we agree that Zambia should, indeed, begin to gradually move towards cost reflective tariffs – particularly in light of Zambia’s precarious fiscal position – we are of the view that consumer interests should remain at the centre of all decision-making. CUTS is of the view that only following meaningful efforts towards internal reform of Zesco should an increase in electricity tariffs for consumers be considered,” stated Makumba.

“In 2017, we applauded the government for lifting the life-line electricity tariff for consumers from 100 kWh to 300 kWh. We noted, however, that quantity-based subsidies were not the most efficient way of targeting the poor as low-income consumers are not necessarily those who use the least electricity. We indicated that there was a need, therefore, to firstly, increase the coverage of electricity in Zambia, particularly in rural areas, and secondly, identify ways of better targeting subsidies to ensure that subsidies accrue to those most in need. This new proposal put forward by Zesco may, therefore, have negative effects on large, poor households that make use of more than that 100kWh/month.”

         

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