The Energy Regulation Board (ERB) should shelve Zesco’s proposal to hike electricity tariffs because there is risk that Zambian consumers will end up subsidizing the utility’s operational deficiencies.
In a statement, Wednesday, CTPD executive director Isaac Mwaipopo urged the ERB to reject the utility’s proposed tariff hike as there was currently no basis their increments should be effected, pending completion and publication of the much-needed Cost of Service Study.
He noted that domestic consumers may end up subsidizing Zesco’s operational deficiencies, especially in view of the fact that the utility had already been granted two successive tariff increments in 2017.
During that year, Zesco applied for a 75 per cent upward increase in electricity tariffs and had earlier applied for an average of 187 per cent increase for all consumer categories in 2015 except the mines, which continue to purchase at preferential rates through Power Purchase agreements.
“It is becoming more evident that successive increments in electricity tariffs are not dealing with the many underlying problems in the electricity sub-sector but only resulting in increasing the cost of living for the ordinary Zambian people. CTPD objects the recent proposed tariffs based on the following premises: Firstly, the general public was promised prior to the 2017 tariff adjustment that any successive increase in electricity tariffs would only be done on the basis of findings from the Cost of Service Study,” Mwaipopo stated.
“To the best of our knowledge, the findings of this study have not been published, so we wonder on what basis this adjustment is premised on. Can ERB and Zesco give a status update on the progress made in conducting and finalizing the Cost of Service Study? There is need to help citizens understand the actual unit cost of generating and supplying electricity in order to understand the basis for tariff adjustments.”
He argued that consumers may end up subsidizing Zesco’s operational deficiencies.
“It is becoming clearer now that successive increases in electricity tariffs have not managed to address the actual bottlenecks and if the country continues on this path, there is a risk that we might even be subsidizing operational deficiencies,” stated Mwaipopo.
“In drawing lessons from South Africa’s debt-laden power utility, Eskom, which equally has been facing challenges as a result, the South African government recently decided to unbundle the power utility in to three separate entities that is generation, transmission and distribution but all falling under the company Eskom Holdings. Zambia may need to start exploring such options going forward. It is from the aforementioned that CTPD would like to caution the ERB on the proposal to increase electricity tariffs, let them finalize the Cost of Service Study before effecting any adjustments.”
According to a revised schedule issued last month, Zesco 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.