ZESCO transmission lines

THE Energy Regulation Board (ERB) has received an application from ZESCO Limited to adjust electricity tariffs upwards.

Meanwhile, the board has set April 23, 2019, as the deadline for making submissions on the matter.

According to the ERB, ZESCO Limited has proposed to revise retail electricity tariffs upwards citing the prevailing macroeconomic conditions, rising cost of generating power from ZESCO's infrastructure and Independent Power Producers (IPPs), suspension of the Cost of Service Study (CoSS) and rising cost of connecting to the grid.

ZESCO hás submitted that the Macroeconomic factors as measured by Consumer Price Index (CPI), lending rates and the exchange rates have negatively impacted the operations of the utility.

The company also states that part of the revenue that will be realised from the adjustments will go towards the expansion of the system, reinforcement, improvement in the quality of service and the ability to meet the anticipated demand from existing and new customers.

The utility company further submit that the cost of power from new generation infrastructure is much higher than the cost of generation from the old depreciated power plants which resulted in an overall increase in the cost of generation adding that there is tarrif difference between the cost of power purchases and end user tariffs which are not being moderated by tarrifs revision.

ZESCO adds that the suspension of the CoSS which would have determined the benchmarks cost reflective tarrifs, has necessitated the parastatal firm to make a tarrif application.

Furthermore, ZESCO has stated that the connection fees which have remained static since 2005 have had a negative impact on the operations of the company.

"According to ZESCO, the cost of connecting customers to the electricity grid has been on the rise over the past few years whilst its connection fees have remained the same since 2005. ZESCO stated that this has led to prospective customers paying non-cost reflective connection fees which have led to ZESCO subsidising the cost of connections," the application states.

Meanwhile, the ERB has set April 23, 2019 as the deadline for making submissions on the matter.

The board, however, says in reviewing ZESCO's application, they will be guided by regulatory principles among them; (a) allow recovery of prudently incurred costs by the utility, (b) allowance of used and useful utility assets in the delivery of electricity servicss go be included in rate base for computing an allowable rate of return, ensure financial sustainability of the utility to ensure security of supply, (c) the need to allow cost reflective tariffs, (d) need for delivery of quality products and service, (e) social considerations for the customers in the lower income brackets and the performance of ZESCO on the agreed KPI's.



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