Erongo RED explains tariff increase, resolutions taken
16 September 2021 | Energy
Fessor Mbango; Erongo RED CEO; “We have considered all possible ways to ensure that we pass on the least and reasonable tariff adjustments to the customers…”
An electricity tariff increase of 1.7% has been in effect from July 2021 and runs until June 2022.
More light was shed on this adjustment by Erongo RED during a media conference in the harbour town on Tuesday.
Chief executive of the regional electricity distributor, Fessor Mbango, explained that the Electricity Control Board (ECB) announced that NamPower’s average tariff would increase from N$1.65 to N$1.69 per kilowatt-hour for the 2021/22 financial year.
“This constitutes a weighted average increase of 2.92%. However, the actual impact on Erongo RED is 3.6%. NamPower’s tariff forms the baseline for Erongo RED’s tariff increase, as it is the biggest expenditure. Thus, NamPower’s tariffs affects our tariffs and impacts consumers.”
After the announcement by NamPower, Erongo RED applied to the ECB for a tariff adjustment increase of 1.7% for this financial year.
“The ECB approved the weighted average of 1.7%. This adjusted tariff resulted in increases on different customer segments. The impact will vary depending on individual consumer consumption patterns. The ECB levy remains unchanged from 1 July 2021 to 31 June 2022. The ministry of mines and energy has not pronounced themselves on the NEF levy for the 2021/22 financial year.”
Mbango added that Erongo RED has not increased electricity tariffs for the past two years.
“We have taken a number of resolutions for the 2021/22 financial year. Despite the increase, pensioners will continue to enjoy other benefits such as no basic charges up to 40-ampere circuit breakers. Pensioners will also continue to enjoy subsidized tariffs (special tariffs) up to 40-ampere circuit breakers, and installation of prepaid box is free for pensioners.”
He said that Erongo RED has also resolved to continue with lifeline (cheaper) tariffs for customers on the 20-ampere circuit breakers. These customers will be charged on the inclining block tariffs.
Inclining Block Tariffs means that the electricity price is divided into three blocks.
The first block of electricity is at the lowest price for the first 100 units. As the customer purchases more electricity during the month, the electricity bought will eventually fall in block 2 for the next 400 units, which is a bit more expensive.
This process repeats automatically as the customer purchases further electricity to move into the last block, which is above 500 units.
At the end of each month, the history is reset and the customer will again start the next month from block 1. Thus, the first 500 units for this customer segment is subsidized.
Pre-paid customers above 20 amp connections, will continue on the flat tariff structure. Customers in this category will be charged the same rate throughout the month.
“We have also decided to continue with the free pre-paid meter project for pensioners and customers who are on debt management,” Mbango said.
He emphasised that Erongo RED wants to support vulnerable members of the community, especially customers who cannot afford to pay the actual retail tariffs.
“We advise them to move to the lifeline tariff provided they meet the qualification criteria set out in the Social Tariff policy. Although it requires a behavioural change in how we use electricity, a person can comfortably manage with the 20 amperages with all basic household appliances connected.”
He advised that if consumers use electricity sparingly, they will spend less on electricity, but if people use the electricity carelessly then they will have to pay for the energy consumed.
Erongo RED currently subsidizes around 10 600 customers, which consists of pensioners and lifeline customers. This represents 24% of the active customer base of the regional electricity distributor.
Mbango also explained that for this financial year, Erongo RED took into account the current economic situation and the impact of electricity costs on commercial and industrial customers, as well as the impact of Covid-19 on industries, businesses, farmers and residential consumers.
Furthermore, “we cut our expenditure and put some of our projects on hold to accommodate our customers,” Mbango concluded.