The Namibia Electricity Control Authority has approved the tariff request submitted by the Namibia Power Corporation (NamPower) and will increase the bulk electricity tariff by 2.92% effective July 1, 2021.
After considering an increase in tariff application for an effective wholesale tariff, including generation and transmission, NamPower’s 5.8% increase, the Electricity Control Commission announced an increase of 2.92 % for fiscal year 2021/2022.
This means that consumers will now pay up to N $ 1.6982 ($ 0.11) per kilowatt hour, which fell from N $ 1.6500 per kilowatt hour as of July 1, 2021.
The new electricity tariff will apply to NamPower’s large customers, including distribution utilities, local authorities, regional councils and mines. Regional electricity distributors will now all have to ask the ECB individually for a review of their distribution tariffs. It is only when these individual requests are approved by the ECB that they will be applicable to end consumers.
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ECB CEO Foibe Namene said: “The Electricity Control Board is aware that the economy is affected by the COVID-19 pandemic, but also depends on a reliable and affordable supply of electricity. . It is therefore the regulator’s responsibility to ensure a sustainable electricity industry at affordable prices. ”
The ECB Board of Directors met on April 8, 2021 to deliberate on the review of NamPower’s wholesale tariff request. Namene explained that annual reviews of electricity tariffs are carried out to ensure that utilities charge appropriate tariffs to collect enough revenue to enable reliable and efficient operations at affordable rates.
She noted that when revising the tariff, the ECB had taken into account several factors, including the impact of tariffs on the electricity supply sector, consumers and the economy as a whole.
“As part of the tariff review process and in light of government guidelines on public gatherings due to the Covid-19 pandemic, the ECB has asked stakeholders to present their written opinions, facts and evidence on the application of the tariff electronically by e-mail. Comments submitted by stakeholders were taken into account in the review process, leading to the approval of the tariff, ”said Namene.
Long-term marginal cost
Namene continued that over the years Namibia’s electricity tariff has included an amount for long-term marginal cost.
“Long-term marginal cost is intended to ensure a smooth price path for the future, especially when NamPower runs into cash flow issues due to expensive power supply options or the construction of new power plants.
“This means that long-term marginal cost funds can be used to protect customers against unplanned rate increases or in situations where the economy is depressed and / or to build new power plants that will ensure a projected affordable rate path. . No long-term marginal costs are included in the approved tariff, ”Namene noted.
She stressed that the ECB was aware of the struggling economy which has not yet recovered.
“To mitigate the impact of the tariff increase on consumers and the economy for the period 2021/2022, an amount of $ 2.3 million is authorized to be used for the variable running cost of thermal power plants by NamPower from the long-run marginal cost, ”Clarifia Namene.
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the BCE The CEO added that $ 33.5 million has been allocated from the available fund of $ 38.6 million for long-term marginal costs to partially finance the construction of NamPower’s renewable power plants.
Just over $ 22.9 million is allocated for the 20 MW solar photovoltaic plant currently under construction in Omburu, while the remaining amount will be used to co-finance the soon to be purchased 50 MW wind farm owned by NamPower. .
“In accordance with the pricing methodology, NamPower will not be allowed to repay and amortize the assets created using the $ 33.5 million – and this will result in a total net savings for customers of around $ 67 million. dollars over a 30-year period, and make electricity affordable for end users, ”Namene said.
She concluded that future tariffs should be increased according to inflation and to cover the new generation in accordance with the National Integrated Resource Plan. External factors such as weather conditions, exchange rate fluctuations and other unforeseen circumstances will also be taken into account.