ERA cuts electricity tariffs for third quarter of 2021

The Electricity Regulatory Authority (ERA) has announced reductions in electricity tariffs to be charged by UMEME for supply of electrical energy for the third quarter of 2021.

According to ERA’s media statement released on Friday, 9th June, the new electricity end-user tariffs indicate a remarkable reduction across consumer categories, with exception of street lighting.

The authority noted that, domestic consumers will now pay Shs 250 for the first 15 units under the lifeline tariff and thereafter pay Shs747.5 for the next units purchased. This represents a reduction from UGX 750.9 in the previous quarters.

Commercial Consumers will now pay UGX 616.6 from UGX 639.8, Medium Industrial Consumers – UGX 526.9 from UGX 556.0, Large Industrial Consumers – UGX 355.0 from UGX 361.0, Extra Large Consumers – UGX 300.2 from UGX 301.7, while the Tariff for Street Lighting has been maintained at UGX 370.0.

“The approved Electricity End-User Tariffs represent a Weighted Average Reduction of  2 per cent, relative to the Tariffs of the Second Quarter of 2021.” read in part ERA’s statement.

Commenting on the tariff changes, the Chief Executive Officer of the ERA, Eng. Ziria Tibalwa Waako, said; “the Commercial Consumers and Medium Industrial Consumers are the biggest direct beneficiaries of the reduction in Tariffs applicable for the period July to September 2021, with a reduction as much as UGX 23.2 per Unit and UGX 29.1 per Unit of Electricity consumed for the Two (2) Consumer Categories, respectively.”

Eng. Waako further explains that the reduction in the Tariffs of these Two Categories is a deliberate effort by the Electricity Regulatory Authority to support the Small and Medium-sized businesses to recover from the adverse effects of the COVID-19 Pandemic, thereby contributing to the recovery of the economy.

ERA says, the new End-User tariffs are attributed to the several factors including appreciation of the Uganda Shilling against the United States Dollar In the Second Quarter of 2021, the Exchange Rate of the Uganda Shilling against the United States Dollar which appreciated by 3.3%, from Ush 3,665.78/US$ as at 26th February 2021 to Ush 3,546.0 as at 31st May 2021.

The Exchange Rate of the Uganda Shilling against the United States Dollar also appreciated by 4.1% from the Exchange Rate of Ush 3,699.17/US$ in November 2020, which was used to determine the Base Tariffs for the year 2021.

The authority also attributed changes to increment in the International Fuel Prices

for crude oil which increased in May 2021 to US$ 66.91 per Barrel, compared to US$ 40.08 per Barrel used in the determination of the Base Tariffs for 2021.

“This represents an increase in the International Fuel Prices by 66.9% from the Base Period.”

The New Tariffs according to ERA apply to all Electricity Consumer Bills raised by Umeme Limited, based on Meter Readings and Yaka purchases taken in the period July to September 2021.

In line with the Quarterly Tariff Adjustment Methodology that was approved by ERA in 2014, the Authority sets out an Annual Base Tariff at the beginning of each calendar year.

“The Base Tariff is adjusted by ERA on a Quarterly basis to provide for changes in the Macroeconomic factors, namely: the Consumer Price Index, the Exchange rate of the Uganda Shilling against the United States Dollar, International Fuel Prices, and the Energy Generation Mix (from the assumptions used in the determination of the 2021 Base Tariffs)”

The Base Tariff is adjusted by ERA on a Quarterly basis to provide for changes in the Macro-Economic factors, namely: the Consumer Price Index, the Exchange rate of the Uganda Shilling against the United States Dollar, International Fuel Prices, and the Energy Generation Mix (from the assumptions used in the determination of the 2021 Base Tariffs).