Electricity prices for domestic users up by over 7%

By Agather Atuhaire

The Electricity Regulatory Authority (ERA)has announced a new electricity tariff for the third quarter which will see domestic and commercial users pay about shs 50 more for a unit.

In the new announced tariff, domestic users will pay shs 771 for a unit of power up from 718 in the last quarter; commercial users will pay shs 687 from previous 647, medium industries will pay shs 615 from 595 while large industries will pay 382 for a unit instead of 374.5 incurred in the last quarter.

The regulator attributes the upward surge to the increase in fuel prices, the depreciation of the shilling against the dollar and the increase in inflation rates which affect the tariff by virtue of the automatic tariff adjustment mechanism.

“The Quarterly Tariff Adjustment Methodology provides for adjustment of the Annual Base Tariffs in line with changes in Inflation, Foreign Exchange rate and Fuel Prices.” Reads the regulator’s statement in part.

Unfortunately for electricity users, all these factors have been on the increase of late.
The Uganda Shilling has for instance depreciated by about 5 percent against the Dollar from April when the second quarter tariff was announced from shs 3634 to current 3845.

The foreign exchange rate factor has had the biggest influence on the tariff for domestic users reflecting 62.3% followed by the fuel exchange factor at 12.3%. The inflation adjustment factor contributed only 2.2%.

“Foreign exchange rate Adjustment Factor of Ush 62.3/kWh for Domestic consumers, Ush 44.5/kWh for Commercial consumers, Ush 29.2/kWh for Medium Industrial consumers, Ush 15.3/kWh for Large Industrial consumers, Ush 12.5/kWh for Extra – Large was to review quarterly, electricity tariffs to reflect changes in factorsIndustrial consumers and Ush 56.5/kWh for Street Lighting.” Says the regulator.

The International Fuel Price increased from US $60.74 per barrel used in the determination of the Base Tariffs to US$ 74.11 per barrel as at the end of May.

This, the regulator says resulted into a positive Fuel Adjustment Factor of Ush 11.2/kWh for Domestic consumers, Ush 5.4/kWh for Commercial consumers, Ush 5.4/kWh for Medium Industrial consumers, Ush 5.3/kWh for Large Industrial consumers, Ush 5.1/kWh for Extra – Large Industrial consumers and Ush 5.5/kWh for Street Lighting.

The regulator has however lowered the tariff for the extra large industries from shs 369.5 to 314 in a bid to stimulate demand. The regulator explains that this has been made possible through the refinancing of Bujagali power plant.

“Following the modification of the Bujagali Energy Limited Licence, the Government of Uganda finalized the debt refinancing of the Bujagali Hydro Power Plant. The benefits arising from the debt refinancing of the Bujagali Hydro Power Plant have been allocated to the Extra-Large Industrial consumers through the Exchange Rate Adjustment Factor.”

ERA says the impact of increased demand will be allocated to the other consumer categories in a phased manner during subsequent Tariff reviews to make power more affordable.
The resultant effect of the debt refinancing of the Bujagali Hydro Power Plant is a minus 62.9/kWh for the Extra-Large Industrial consumers.

The automatic tariff adjustment mechanism was adopted in 2014 to review the tariff quarterly to reflect the changes in factors that affect electricity prices.