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Namibia: No power tariff hike for Windhoek

TagsElectricity tariffs, Energy Access

The Electricity Control Board says there is no need for an increase in electricity tariffs in Windhoek this year.

This is because current charges are sufficient to cover the City of Windhoek's planned operational budget.

The regulator rejected a proposal by the municipality to increase electricity rates with 2% for the current financial year.

The board's chief executive officer, Foibe Namene, confirmed this last week.

This means Windhoek residents and businesses will not spend extra for the units they usually consume for the year.

The municipality proposed to the Electricity Control Board (ECB) to charge consumers more, mainly to fund the procurement of operational vehicles, including cherry-picker trucks, and other equipment.

The ECB reviews tariffs for bulk customers on a yearly basis and makes adjustments based on a number of factors.

Namene said various factors, including the impact of the proposed tariff increase on the electricity supply industry and consumers, were considered before the board decided to reject the municipality's proposal.

The depressed domestic economy and the impact of the Covid-19 pandemic on the economy and the electricity supply industry were among the factors contributing to the ECB's decision.

"It is the responsibility of the regulator to ensure a sustainable electricity industry at affordable tariffs," Namene said.

City of Windhoek chief executive office, Robert Kahimise confirmed yesterday that the ECB has declined their proposal and instead the council were ordered to implement 0% increase.

"The ECB has not supported our tariff application and awarded the council a 0% tariff increase," he said.

Kahimise explained that despite the regulator's decision, the city council's electrification of informal areas will not be impacted as they are funded by government through grants.

There are currently 43 registered distributors in the country, and 10 have submitted applications for tariff adjustments, which have been finalised.

ErongoRed has applied for a tariff reduction, which will be lower than the 1,6% rate set by the ECB.

The northern electricity distributor (Nored), Oshakati Premier Electric and NamPower Distribution all applied for a 0% tariff increase, in line with the ECB's determination.

This means the tariff rate of these distributors will remain the same and their applications were approved, Namene said.

The ECB uses the 'cost-plus' method to determine tariffs, meaning the revenue requirement or the cost of a utility to distribute and supply electricity is established.

The determined cost, plus a regulated return (the weighted average cost of capital) determines the end-user tariff.

The revenue requirement includes all allowable costs of utilities to cover the cost of supply, including the primary energy import, bulk purchases, operating and maintenance costs.

Revenue requirements also include customer-service costs, overheads, asset-related costs and investment costs.