Uganda consumers will enjoy a three months lease of lower electricity tariffs after Umeme Limited were allowed by the regulator, the Electricity Regulatory Authority, to give its customers a bonus.
ERA sets prices that can be charged for electricity to Umeme Limited’s customers; the prices include fixed fees, energy charges, and maximum demand charges.
The new tariffs, which are also the base tariffs for 2020 and will be adjusted quarterly, are on average 1.2% lower than the tariffs of the fourth quarter of 2019.
The largest average decline was for medium industries, their average tariff falling 3.4% to Shs575.2 per kilowatt hour (kWh), according to a tariff schedule published by ERA. The average tariff for commercial customers reduced by 2.5% to Shs649.4/kWh, while the new tariff for large industries is Shs362.4/kWh or 0.4% lower than what was set for the fourth quarter of 2019.
Electricity tariffs for extra-large industries and streetlights declined by an average of 0.1% to Shs302.2/kWh and Shs370/kWh, respectively. A similar fall was also observed for domestic consumers, who will have to pay Shs751.7 per kilowatt hour in the first quarter of 2020.
But domestic consumers, who include residential houses, small shops, and kiosks, will be charged Shs250/kWh for the first 15 units they consume every month. This so-called lifeline rate is intended to subsidise low-income consumers.
The decline in the new tariffs is a result of the reduction in the international prices of fuel between this November and December 2018, and the appreciation of the Uganda shilling against the US in the year to November 2019.
International fuel prices fell 3.7% while the Uganda shilling appreciated by 0.8% against the US dollar in the review period.
The regulator determines electricity tariffs taking into account changes in the exchange rate, core inflation, the US producer price index, and international fuel prices.
In addition, the base tariff also considers the revenue requirements of licensed electricity supply companies. As a result, it considers changes in factors like energy losses, collection rates, operations and maintenance costs, and investment costs.