Electricity Control Board approves 2.92% bulk tariff hike
The Electricity Control Board (ECB) has approved a 2.92% average bulk tariff increase effective from 01 July 2021, translating into an increase from the current N$1.6500 per kilowatt-hour to N$1.69882 per kilowatt-hour for 2021/22.
The approved tariff is applicable to Nampower bulk customers (regional energy distributors, local authorities, regional councils and mines).
The approved increase follows a two-year period of no bulk tariff increases. The increase comes after NamPower applied for a bulk tariff increase of 5.8%.
The ECB said future tariff are expected to increase in line with inflation. In March 2021, prices in the electricity, gas and other fuels fell 0.4% year-on-year. Overall annual inflation rate rose to 3.1% in March.
Foibe Namene, CEO of the Electricity Control Board while announcing the tariff increase on 28 April said no Long Run Marginal Cost is included in the approved tariff.
Over the years, the tariff included an amount for Long Run Marginal Cost, which is intended to ensure a smooth tariff path, especially when NamPower is experiencing cash flow challenges due to expensive power supply options or building new power plants.
“This means that the Long Run Marginal Cost funds may be used to cushion customers from unexpected tariff hikes, in situations where the economy is depressed and to build new power plants that will ensure an affordable projected tariff path,” Namene said.
Further, to mitigate the impact of the tariff increase on customers and the economy for the period 2021/22 an amount of N$35 million is allowed to be used for variable operation cost of the thermal plants by NamPower from the Long Run Marginal Cost.
Namene also announced that an amount of N$500 million is allocated from the available N$576 million Long Run Marginal Cost fund to partially fund the construction of NamPower renewable energy plants.
N$342 million of this is allocated to the 20MW Solar PV plant currently being constructed at Omburu. The remaining N$158 million will be used for part funding of the 50MW NamPower-owned wind plant to be procured soon.
“NamPower will not be allowed return and depreciation on the assets created using the N$500 million and this will result in a total net saving to the customers of approximately N$1 billion over a period of 30 years, and making electricity affordable to end users,” Namene said.
