Zorena Jantze
IN the midst of increasing commodity prices due to political tensions in Europe, Namibians will have to dig a bit deeper when paying for expenses as the Electricity Control Board resolved to increase the average bulk tariff by 7.30% from the currently approved tariff of N$1.6982 per kilowatt-hour to N$1.8222 per kilowatt-hour for 2022/2023.
This means that NamPower bulk customers (i.e Regional Electricity Distributors (REDs), Local Authorities, Regional Councils and Mines) will pay more for the purchase of power which will also be applicable to end consumers when approved.
The approved tariff adjustment is effective from 1 July 2022.
Acting Chief Executive Officer of the ECB Rachel Boois shared that the ECB is cognizant of the fact that the economy is affected by the impacts of the Covid-19 pandemic and is equally dependent on reliable and affordable electricity supply.
“It is the responsibility of the regulator to ensure sustainable electricity industry at affordable tariffs. Future tariffs are expected to increase in line with inflation and to cater for new generation as per the National Integrated Resource Plan. However, we must realize that external factors such as weather, foreign exchange fluctuations, and other unforeseen circumstances may affect the project price path and must be taken into consideration when reviewing future tariff applications,” Boois noted.
She further stated that as part of the discussions with the Minister of Mines and Energy, the Ministry availed N$100 million through the National Energy Fund (NEF) to mitigate the impact of the increase on consumers. The allocated funds will be used for energy related variable costs of NamPower in consultation with the ECB, Boois said.
She said that for the past two years, a total amount of N$85 million was availed to mitigate the impact of the tariff increase on consumers and the economy.
“Over the years, the tariff included an amount for Long Run Marginal Costs (LRMC) purposes. The Long Run Tariff Marginal Cost is intended to ensure a smooth tariff path for the future, especially when NamPower is experiencing cash flow challenges due to expensive power supply options or building costs. The long run marginal fund may be used to cushion customers from unexpected tariff hikes or in situations when the economy is depressed or to build new power plants that will ensure affordability on projected tariff path,” Boois shared.
