Cheaper electricity without charges, says ECB

By: JO-MARÉ DUDDY

SCRAPPING or fixing the compulsory surcharges the three regional electricity distributors (REDs) have to pay the local authorities will result in cheaper power for most consumers, the Electricity Control Board (ECB) said on Tuesday.

ECB chief executive officer Siseho Simasiku told the Parliamentary Committee on Economics, Natural Resources and Public Administration that the regulator has devised three strategies regarding local authority surcharges (LASs) to benefit the consumer. LASs were implemented to ensure that local authorities weren’t financially worse off than before the REDs were established.
Simasiku said LASs can either be scrapped and Government can subsidise the amount that local authorities lose as a result. This will cost Government about N$213 million every year, but will mean that the consumer pays 13,12 cents per kilowatt hour (c/kWh) less.
Alternatively, Simasiku said, LASs should be fixed at 15 c/kWh and Government should pay the difference between those LASs above 15 c/kWh and the fixed rate to local authorities.
Currently, the local authorities in Lüderitz, Gobabis, Otjiwarongo, Tsumeb and Henties Bay receive LASs from the appropriate RED of at least 20 c/kWh, while the one Grootfontein get more than 40 c/kWh.
As a third option, Simasiku said, LASs should be fixed at 15 c/kWh and then reviewed every two to three years, allowing for inflationary increases.
“In the long run this will be in the best interest of the local authorities/regional councils, since the LASs will keep up with inflationary pressures but will be at regulated levels and can be reviewed in terms of affordability to ensure that all parties are protected,” he said.
However, he expects that the option “might get some revolt” from the local authorities, Simasiku said. In addition, it will only benefit customers in areas where the LASs are above 15 c/kWh.
The ECB therefore prefers the scrapping of the LASs and Government picking up the tab.
Simasiku said the ECB also believes that the tax burden of REDs “is real” and should be investigated.
Erongo RED, Nored and Cenored recently called on the committee to exempt them from income tax, saying it is pushing up the price of electricity.
In addition, the REDs asked the committee to consider NamPower’s encroachment on large power users (LPUs) in the REDs’ areas. The REDs want LPUs to buy electricity directly from them and not NamPower.
Simasiku said the ECB is working on a project to address the issue.

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