HomeBusiness DigestNew power body scuttles Zesa tariff hike

New power body scuttles Zesa tariff hike

Godfrey Marawanyika

A NEW power-pricing proposal to be introduced by the new Zimbabwe Electricity Regulatory Commission (Zerc) could scuttle Zesa Holdings’ plans to hike tariffs by 600% starting this month.

Zerc has recommended that electricity tariffs be done once a year with approval from the commission.

This should mean that Zesa Holdings cannot make ad hoc tariff hikes. In a policy document released this week, the commission said power distribution firms should only effect a 12-month tariff increment instead of periodic hikes.

The commission is mandated in terms of the Electricity Act to govern and control the electricity supply industry (ESI). The document, titled “Electricity Pricing Methodology”, said tariff hikes would now be approved once a year.

“This means that tariff application will have to be done annually by all licensees,” Zerc said in the document.

“Tariff adjustments to cater for the current high inflationary environment will be accommodated using an indexation formula to be invoked when necessary but no less than three months after previous tariff adjustments.

The regulator may at a later stage, basing on economic stability, reduce assessment and review periods to reduce costs and increase stability.”

The new pricing policy came as Zesa was planning to increase power charges by an average 300%.

Sources last month said Zesa was planning a massive tariff hike of 230% for domestic consumers. The commercial sector, which includes manufacturers, would pay up to 600%.

Before Zerc, power utilities needed cabinet endorsement before they could adjust prices.

Last year, Zesa hired a South African-based energy consulting and advisory group, Sad-elec, which recommended the setting up of an independent regulatory authority in the sector.

The commission, appointed last month, is expected to promote competition through the licencing of more players in the energy sector. It will be responsible for licensing and approving price adjustments.

Zesa requires at least US$13 million a month to meet electricity imports, service debts and buy spares for refurbishments. It generates 1 440 megawatts of power from Kariba South power station (750 MW), Hwange power station (590 MW) and a small thermal power (100 MW). This constitutes 68% of national requirements.

Imports account for 650 MW, representing 32% of national requirements from Eskom (300 MW), Hydro Cahora Bassa (250MW) and 100 MW from Snel of the Democratic Republic of Congo.

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