Electricity price drops 2.5%

03 May 2019 | Energy

The Electricity Control Board (ECB) yesterday announced a 2.5% decrease in the bulk tariff for electricity - the first price drop in 36 years.

The bulk rate for power will drop from N$1.69 per kilowatt-hour to N$1.65. The new rate is effective from 1 July until 30 June next year.

NamPower had applied for a reduction of 3.11% but 2.5% was approved by the ECB.

The approved tariff decrease is applicable to all NamPower's bulk customers, including the regional electricity distributors, local authorities, regional councils and mines.

The distributors will individually apply to the ECB for a review of the tariffs they charge end users.

According to Foibe Namene, CEO of the ECB, the price drop was necessitated by the power crisis of 2015 when NamPower was forced to import more expensive electricity to ensure a constant supply.

“This led to an under-recovery amount incurred between 2015 and 2017.

The under-recovery amount was provided for in the tariff by the ECB over a three-year period, from 2015 to 2018,” Namene said. The under-recovery amount is now fully recovered and a tariff decrease has become necessary to ensure that the power utility does not over-recover on the tariff for the next year and that the tariff remains cost reflective, as directed by cabinet.

The tariff decrease, Namene explained, would “enable NamPower to fully recover its allowed operating costs and ultimately fulfil its financial obligations, including payments to local independent power producers”.







Namene added that the consumer tariff would most likely stay the same because the bulk tariff decrease absorbed the necessary inflationary adjustments for the coming year.



However, in terms of the future outlook, the ECB believes that the bulk tariff will increase by an average of 5% for the next five years, in line with inflation.



“It should be noted that external factors such as the impact of weather conditions, foreign-exchange fluctuations and other unforeseen circumstances have an impact on the future tariff outlook.”



Namene also announced that the cabinet had approved a Modified Single Buyer Market Model for the power industry, which will attract more independent power producers and promote investment in the sector.



“We are cognisant of the fact that the economy is highly dependent on reliable and affordable electricity supply. It is therefore the responsibility of the regulator to ensure a sustainable electricity industry at affordable tariffs,” Namene said.





YANNA SMITH

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