THE Energy Regulation Board (ERB) has approved a 35 per cent average increase in electricity tariffs effective August 1, 2009 to 2010 against Zescos proposed 66 hike.The board has also allowed Zesco to increase tariffs by another 26 per cent from 2010 to 2011 in an effort to help the power tariff rise that Zesco had asked for to fund power generation projects to meet rising electricity demand.
Announcing the approval yesterday, ERB board chairperson, Sikota Wina (pictured) said ERB was cognisant of the urgency of migrating to cost reflective tariffs but that the process should be managed with minimal shock to the economy.
For 2009 to 2010 the increase for residential customers is 40 per cent, large power customers 42 per cent, small power 26 per cent, commercial 27 per cent, services are at 25 per cent with a total average increase of 35 per cent.
For 2010 to 2011 the hike for residential customers will be 33 per cent, large power 32 per cent, small power 18 per cent, commercial 22 per cent, services 19 per cent with an average increase of 26 per cent.
Mr Wina said Zesco applied for a 66 per cent increase for 2009 with a revenue projection of K1,752 trillion and another K2,520 trillion for the period 2010 to 2011.
He said the board reviewed Zescos proposal and adjusted the projected revenue to be K1,004 trillion for 2009 to 2010 and K1,325 trillion for 2010 to 20 11. Mr Wina said the tariff review was within the current three-year multi-year framework that started last year and that the variations would last up to March 2011.
Zesco applied for a tariff review citing critical shortage of electricity, prevailing economic conditions, rising operational costs and the system and customer base expansion exercise as the reasons for the upward tariff adjustment. He said the board received 69 submissions from the public and during the public hearings some consumers supported the increase, while others opposed it.
Mr Wina said that the main issues raised by consumers included the need for the Government to recapitalise Zesco, while the power utility company should implement cost reduction measures.
He said some consumers suggested that Zesco should borrow from capital markets, increase debt collection efforts and that the Government should unbundle the company.
Mr Wina said the board found that Zescos service delivery had deteriorated, had high staff costs and that the power rehabilitation project had taken too long. He said the company had not shifted its staff tariffs to the regular residential tariffs, and that in some cases customers who were connected to the grid were not being billed.
He said the ERB would monitor the agreed key performance indicators upon which subsequent tariff increase would be based especially that the approved tariffs were closer to cost reflective levels.
Zesco managing director, Lemba Nyirenda, said he was happy with the tariff adjustments because it was in line with the regional agreement that tariffs be increased to cost-reflective levels.
Dr Nyirenda said that the increase would help Zesco meet its balance sheet because the electricity business was very expensive. Zambia Association of Manufacturers (ZAM) president Dev Barbar and Chamber of Mine of Zambia (CMZ) president, Nathan Chishimba said separately that they needed to critically examine the new tariffs before they could comment.
Times of Zambia
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