Electricity an expensive commodity

THE looming power shortage in southern Africa and rising electricity costs might soon force consumers to consider alternative power supplies and even to become electricity producers themselves.

A new draft electricity law will allow independent power producers (IPPs) to feed excess electricity generated from gas, wind, solar panels or invader bush into the national grid. Experts met in Windhoek on Wednesday for a breakfast meeting organised by the Namibia Economic Society and the Friedrich Ebert Foundation to discuss whether electricity was affordable in Namibia.Government spends N$25 million on rural electrification each year, connecting villages and settlements with power lines to the national grid.This was an expensive exercise, said Uli von Seydlitz, chief executive officer of Emcom, a company dealing with energy supply solutions.Another option would be to supply very remote areas with solar electricity, which is an off-grid solution.The average electricity price for individual consumers now stands at around 70 cents per unit and could rise to about 88 cents by 2016, without adding the effects of inflation, Von Seydlitz said.The present price is made up of generation costs (18c), transmission (25c) and distribution and supply cost (19c) and a surcharge which local authorities add and which differs from town to town.”Some municipalities add quite a high surcharge for consumers to subsidise other service sectors,” Von Seydlitz pointed out.This placed a burden on consumers, especially industrial customers.Once all regional electricity distributors (REDs) had taken over the electricity supply functions from municipalities, the issue of the surcharge would have to be addressed, he added.”It could be that in the long run the consumers in towns cross-subsidise other services and that would be an unsustainable way,” he stated.Helene Vosloo, manager for economic regulation at the Electricity Control Board (ECB), said all power producers had to register with the ECB for a licence and tariffs had to be approved for electricity fed into the power grid.The revision of the existing Electricity Act was so comprehensive that a new Electricity Bill was being prepared which would allow for this.”All licensees are obliged to only charge tariffs approved by the ECB, also under the existing law,” Vosloo said.”In the case of non-compliance, this can lead to the cancellation of the licence and a fine of N$4 000 or one year in prison,” she said.”Arrest the Mayor of Windhoek,” a member of the public requested, referring to the recent controversy about the Windhoek municipality overcharging consumers on an electricity levy.Vosloo said this was not so easy and that the ECB believed in negotiations as in the case of Windhoek.”The Minster of Mines and Energy has the final say in such matters,” she pointed out.Individual customers could also lay civil claims against electricity providers (like municipalities).”A court might order a municipality to pay back the overcharged fees to consumers, but this could lead to the attachment of municipal assets and that would be worse,” Vosloo pointed out.”The new electricity law will deal with the existing loopholes.”The ECB is conducting a study on tariffs charged by all electricity providers and the impact of cost-reflective charges on consumers.Results will be available early next year.Experts met in Windhoek on Wednesday for a breakfast meeting organised by the Namibia Economic Society and the Friedrich Ebert Foundation to discuss whether electricity was affordable in Namibia.Government spends N$25 million on rural electrification each year, connecting villages and settlements with power lines to the national grid.This was an expensive exercise, said Uli von Seydlitz, chief executive officer of Emcom, a company dealing with energy supply solutions.Another option would be to supply very remote areas with solar electricity, which is an off-grid solution.The average electricity price for individual consumers now stands at around 70 cents per unit and could rise to about 88 cents by 2016, without adding the effects of inflation, Von Seydlitz said.The present price is made up of generation costs (18c), transmission (25c) and distribution and supply cost (19c) and a surcharge which local authorities add and which differs from town to town.”Some municipalities add quite a high surcharge for consumers to subsidise other service sectors,” Von Seydlitz pointed out.This placed a burden on consumers, especially industrial customers.Once all regional electricity distributors (REDs) had taken over the electricity supply functions from municipalities, the issue of the surcharge would have to be addressed, he added.”It could be that in the long run the consumers in towns cross-subsidise other services and that would be an unsustainable way,” he stated.Helene Vosloo, manager for economic regulation at the Electricity Control Board (ECB), said all power producers had to register with the ECB for a licence and tariffs had to be approved for electricity fed into the power grid.The revision of the existing Electricity Act was so comprehensive that a new Electricity Bill was being prepared which would allow for this.”All licensees are obliged to only charge tariffs approved by the ECB, also under the existing law,” Vosloo said.”In the case of non-compliance, this can lead to the cancellation of the licence and a fine of N$4 000 or one year in prison,” she said.”Arrest the Mayor of Windhoek,” a member of the public requested, referring to the recent controversy about the Windhoek municipality overcharging consumers on an electricity levy.Vosloo said this was not so easy and that the ECB believed in negotiations as in the case of Windhoek.”The Minster of Mines and Energy has the final say in such matters,” she pointed out.Individual customers could also lay civil claims against electricity providers (like municipalities).”A court might order a municipality to pay back the overcharged fees to consumers, but this could lead to the attachment of municipal assets and that would be worse,” Vosloo pointed out.”The new electricity law will deal with the existing loopholes.”The ECB is conducting a study on tariffs charged by all electricity providers and the impact of cost-reflective charges on consumers.Results will be available early next year.