The Electricity Regulatory Authority (ERA) has announced new Tariffs to be charged by power distributor Umeme on all End-Users (Retail) consumers in the country, for the last quarter of the year.
The Authority, which is headed by Eng. Ziria Tibalwa Waako as Chief Executive Director, approved the new tariff changes in pursuant to Sections 10 and 75 of the Electricity Act, 1999, Chapter 145 of the Laws of Uganda, which give ERA the mandate to approve the Schedule of Electricity End-User (Retail) Tariffs to be charged by Umeme Limited for the Supply of Electrical Energy in Uganda.
According to Eng. Waako, the revised tariffs which are scheduled for the Billing Period starting October to December 2023, were approved based on a number of factors, some of which include but are not limited to the following;
Increase in Demand
Officials at ERA contend that Electricity Demand is expected to grow at an annual rate of approximately 9.14% in 2023. This is because the total energy purchased by Uganda Electricity Transmission Company Limited (UETCL) is expected to increase from 5,490.1 GWh projected for 2022 to 5.992.22 GWh in 2023. For the nine (9) months period January to September 2023, UETCL is projected to purchase 4,396.8 GWh compared to 4,080.6 GWh purchased for the nine (9) months period January to September 2022, representing an annualized growth of 7755. As such, the energy purchases by UETCL increased from 1,444.1 GWh in Q1 2023 to 1,485.8 GWh for Q3 2023, representing an annualized growth rate of 12.38%.
Bujagali Dam Tax Waiver
The Authority also based the revision of the End-User Tariffs on the fact that the government of Uganda, through the Parliament of Uganda, approved an extension of the Corporate Income Tax waiver for Bujagali Energy Limited beyond June 30, 2023, which partly led to an increase in the power generated for consumption.
Reduced Inflation
As the country’s economy recovers from the recession that resulted from the COVID-19 pandemic and the resultant lockdown, the Uganda Shilling has appreciated against the United States Dollar from UShs/USD 3,738.33, as recorded and published on 30th November 2012 by the Bank of Uganda and as used in the determination of the 2023 Annual Base Tariffs, to UShs/USD 3,719.04 as at 31st August 2013. This represents an appreciation of 0.52% from the 2023 Base Exchange rate and a considerable reduction in inflation.
Changing Fuel Prices
Eng. Waako contends that ERA also based the revision of the tariffs on the International Fuel Prices for crude oil, whereby in August 2023 crude oil prices were recorded at USD 87:33 per barrel, compared to USD 89.73per barrel used in the determination of the 2023 Annual Base Tariffs. This represents a decrease in the International Fuel Prices by 2.67% from the base period.
Besides the above however, the Authority’s decision to revise End-User Tariffs was also advised by the Core Consumer Price Index, which increased from 135-48 as reported by the Uganda Bureau of Statistics for November 2022 to 120.84 for August 2023, representing a 1.08% increase in the CPI.
The ERA also noted that the four units (400MW) of Karuma Hydro Power Plant are expected to be tested in Q4 2023 and form part of the 2023 energy generation mix, which will result in an increase of power supply on the national grid, necessitating the revision of the tariffs.
The Authority also based the new tariffs on the continued implementation of the Declining Block tariff for Large and extra-large Industrial consumers and tariff reduction initiatives pegged on demand growth.
The Table below provides details for the revised End-User Tariffs for the last quarter of the year; October to December 2023:
Q4 OF 2023 TARIFF NOTICEConsumers In Industrial Parks And Large Industrial Electricity Users
In a bid to streamline tariffs for industrial consumers, ERA has also developed a regulatory framework for the direct purchase of electricity by consumers in industrial parks and large industrial electricity users. As a result of this, following the enactment of the Regulations, the ERA is undertaking a review that will lead to the publication of the thresholds and eligibility criteria for qualifying consumers.
Tariff Reduction Pegged On Demand Growth
It should be noted that the ERA has been closely monitoring the performance of participants under the targets approved, effective February 2013. As such, the response has been noted, but majorly with relatively small-scale consumers and because of this, ERA is undertaking evaluation, including the design of the initiative, targets, and coverage. Because of this, further consultations with UMA and other stakeholders will be scheduled leading to the Tariff Year 2024
Customer Re-Categorization
We have also established that ERA is undertaking a review to support value addition in manufacturing. However, there are conditions that must be met for consumers to become eligible to qualify under the different customer categories-manufacturing hospitality.
