Vertically Integrated with Private Sector Participation.
The Utility Regulatory Authority (URA) was established by an act of parliament, the Utility Regulatory Authority Act 2004 to regulate the electric power industry in Mauritius. The regulation of the power sector by the URA, once the Electricity Act 2005 as amended in 2020 is promulgated, will enhance the credibility of the institution. This will have a positive impact on investor and consumer confidence. Meanwhile the electricity sector is being regulated under the Central Electricity Board Act of 1963 and Electricity Regulations of 1939.
Clarity of Roles and Objectives
The URA’s regulatory functions are detailed in the CEB Act, URA Act 2004, and the Electricity Act 2005. Currently, there are overlaps in the roles and obligations of the entities, and once the Electricity Act is promulgated, other regulations would have to be reviewed to address this.
The URA Act makes appropriate provisions for URA to maintain a substantial level “arm’s-length” relationship with the government. The President appoints board members on the advice of the Prime Minister and after consultation with the leader of the Opposition. The appointments are for variable terms ranging from three to five years, renewable once. The chief executive officer (CEO) is appointed by the board. The staggering of the tenures of office for board members ensures continuity and allows for institutional memory and transfer of knowledge to new members.
URA rates low in terms of level of stakeholder independence. There is no requirement for institutional representation on the board. Provisions in the law prohibit the appointment of board members or the CEO if the individual is or has been a director; a shareholder or an employee; or who has any interest in a utility at any time during a period of two years immediately preceding the proposed appointment. There are however no provisions that prohibit the CEO or board members from accepting employment in the regulated utility after the end of their terms in office. Employees of URA are recruited through a competitive process and there are provisions in the law that prohibit them from acquiring any interest in the regulated utilities. The same applies where that person holds an interest or acquires such an interest, by succession or otherwise, where she or he shall, unless the authority determines otherwise, be obliged to dispose of that interest.
URA rates medium in terms of decision-making independence. Regulatory decisions of the authority cannot be overturned by the executive and the authority does not need approval from the executive before taking its regulatory decisions. This is to the extent that such a recommendation is not inconsistent with the URA Act or the relevant utility legislation. The regulatory authority is the final decision maker on tariffs, issuing and amending licences but plays a facilitative role in dispute resolution between regulated utilities and their customers. The sector minister may issue any directives in relation to the implementation of the general policy of the government with respect to utility services and the extension of any utility service to customers in areas not provided with adequate utility services.
URA rates medium in financial independence. It relied on fees levied on regulated utilities as well as license fees at levels approved by the executive. Other sources of funds, include the government subvention The board is responsible for proposing the annual budget, which is presented to the legislature or the relevant budget authority for consideration. The URA board decides on the authority’s staff salary level, which although is based on the public utility salary scale, is lower than that of the utilities. These salary levels would make it difficult for the regulator to attract and retain staff.
URA maintains a substantial level of accountability to stakeholders in the sector. URA has a legal obligation under the URA Act to produce annual reports on its activities, which it presents to the sector minister. There is no formal mechanism besides the formal court system for regulated utilities (or other parties), to contest URA’s regulatory decisions. This process can be lengthy and frustrating for investors and consumers.
Regulatory information is immediately accessible from the URA website. The publication of regulatory decisions is mandatory under the primary law. This gives the authority a high rating regarding making stakeholders aware of factors considered in arriving at decisions. This level of transparency is a boost to investor and consumer confidence in the regulatory processes.
URA rates high in terms of stakeholders having the required information to predict the regulator’s actions. The tariff methodology, which sets the framework, processes and timelines for tariff reviews, was adopted in 2020 and can be amended by the regulator upon ministerial decision. There is a predictable mechanism used by the regulator to disallow costs considered unreasonably incurred by a regulated entity. A documented procedure for obtaining licences is also published.
URA rates medium in the framework for stakeholder participation in decision making. Although the regulator involves key stakeholders in its decision-making process, the consultation process itself is not mandatory and limited to consultations with government. The authority is required to publish the rationale for regulatory decisions and to give public notice of any decision made under the URA Act or the relevant utility legislation, where the decision relates to tariffs, utility service standards, penalties payable by licensees, grant, suspension and revocation of authorisations and licences.
Open Access to Information
URA is rated high for its open access to information. It has a public website, www.uramauritius.mu. This website contains all the necessary regulatory information that the public and particular stakeholders may require.
Economic Regulation – Tariff Setting
URA has a substantial rating for the level of development of economic regulation framework. The tariff setting methodology which was approved in 2020 There are mechanisms to compensate generators for the provision of ancillary service and for stranded assets. The regulator has developed a well elaborated Tariff Guidelines & Methodology which contains a formula for setting end-user tariffs and a schedule for major tariff reviews. They are yet to be officially approved and gazetted.
The utility to is required to seek approval from the regulator prior to making major investments but the regulator is yet to develop a model regulatory accounting framework for use by the utility in tariff application. However, the tariffs are presently set by the utility after approval from the Government pending the promulgation of the revised Electricity Act to enable URA to undertake this activity. To make tariffs affordable to support low-income consumers, the poor and vulnerable, a lifeline block and a cross-subsidy are used. A validated network connection is absent and a cost-of-service study has not been conducted in the past five years.
Technical Regulation – Regulation of Service
URA is rated substantial in terms of the level of development of Quality-of-Service regulations. URA has developed Quality-of-Service (QoS) Regulations and the Mauritius National Grid Code and Distribution Grid code, although they have not yet been officially approved and gazetted. The QoS regulations include provisions for tracking voltage stability, frequency, System Average Interruption Duration Index (SAIDI) and the System Average Interruption Frequency Index (SAIFI), handling of consumer complaints, and billing accuracy. Additionally they also cover technical requirements for grid connection and regulation of renewable energy. Financial sanctions are imposed by law if the utility records SAIDI and SAIFI above the regulatory ceiling. Other areas of customer service with respect to connections and service delivery that are covered in the Quality-of-Service regulations include time for new connections (including response to request for connection and installation) and response customer complaints.
URA is rated substantial for the level of development of the licensing framework. The existing licensing framework covers only grid-connected systems and there is no simplified licensing framework for off-grid and small systems. This is mainly due to the high rate of electrification with less focus on off-grid systems.
URA is rated low in terms of institutional capacity. The regulator reports that it has inadequate levels of highly skilled staff to deal with all the aspects of its regulatory functions. This includes the areas of technical and economic analysis.
Renewable Energy Development
URA rates substantial with regard to the level of development of the framework for developing renewable energy. Renewable energy development in Mauritius is driven by the need to diversify the energy mix and price rather than electrification. URA is responsible for renewable energy regulation while the Mauritius Renewable Energy Agency (MARENA) is responsible for the formulation, development and implementation of the national renewable energy strategy and programs. There are regulations on renewable energy technologies to enhance quality of service but electricity generated from renewable energy is not given priority dispatch. The utility is responsible for developing the tariffs for renewable energy technologies, for eventual approval by the regulator.
Mini-Grid and Off-Grid Systems
There is a low level of regulatory development for mini-grid and stand-alone systems. As the country has achieved 100% national electricity access rate, therefore, developing a full regulatory framework for mini-grids and off-grid systems may not be a priority for the country. However, there is consideration of mini grid and stand alone systems for productive uses in communities as well reducing reliance on fossil fuels.
Energy Efficiency Development
There is a substantial level of development of the regulatory framework for energy efficiency. URA is not responsible for energy efficiency regulation, rather the Energy Efficiency Management Office (EEMO) is the government agency responsible for regulating energy efficiency in Mauritius following the passage of the Energy Efficiency Act in 2011. An Energy Efficiency target at the national level has been set for the power sector and envisages a cumulative target of 10% of energy efficiency gains as compared to the electricity consumption of 2008. Large Energy Consumers are required to carry out an energy audit for submission to the EEMO. A fine is imposed for non-compliance. Importers or manufacturers of refrigerators, electric ovens and dishwashers are required to periodically report on the energy efficiency levels of their appliances. Dealers/importers are required to submit the test report or product certificate and a copy of the energy label to the EEMO when applying for the registration of their regulated machinery. Non-compliance to the Energy Efficiency (Labelling of Regulated Machinery) Regulations 2017, is subject to a fine. The Building Control Act 2012, being implemented by the Building Control Advisory Council has provisions for energy efficiency considerations.
Financial Performance and Competitiveness
From the perspective of the utility, there is a low level of regulatory outcomes on financial performance and competitiveness of the utility and the sector. A cost-of-service study has not been carried out on the utility’s operations within the last five years. While the tariff methodology and frameworks have been developed by the regulator, the regulator does not set the tariffs to be applied by the utility – whose tariffs are approved by the sector ministry. Collection rates are not factored into tariffs but about 95% of rates are collected. The regulator has not developed a mechanism that could deal with electricity theft, but the utility has developed one on its own.
Quality of Service Delivery (Commercial and Technical)
There is a low level of regulatory development in quality-of-service delivery. A Quality of Service regulation has been developed to guide the utility on the level of service it is to deliver to its customers but has not been fully implemented.
It is not a regulatory requirement for the utility to undertake periodic technical audits or valuations of its facilities to establish the true state of the facilities. However, the utility performs audits and valuations and also sets its own ceiling for SAIDI and SAIFI for its own operational purposes.
Facilitating Electricity Access
Mauritius has achieved 100% electrification. The Electricity Act 1939 provides a framework for increasing electricity access and there are regulatory mechanisms in place with regards to electricity connections, including ceilings on the number of days to provide electricity connection to a customer after making payments.
Government should expedite the promulgation of the Electricity Act 2005 as amended in 2020, as this will enable the URA to fully undertake its functions as the regulator
The regulatory law should be amended, or secondary legislations developed to make provision for the following:
- Parliamentary approval the level of the annual regulatory fees and levies charged by the regulator.
- Average level of salaries of regulator staff to be at least equal to those of utilities.
- Regulator to report directly to parliament.
- URA should undertake a cost of service study
- URA should finalise and approve the draft tariff methodology.
- A network connection policy should be developed as part of the tariff methodology, or as a separate document to address related issues of commercial access to the grid.
- Carry out assessment on the quality-of- service performance of the utility