THE Namibia Power Corporation (NamPower) has applied to increase electricity tariffs by 8.4%, the company announced in a newspaper notice yesterday.
The increase is mainly driven by the utility company’s need to align its fixed operational costs with a new multi-year tariff methodology that will be implemented by the Electricity Control Board (ECB).
The ECB’s draft tariff methodology released in December last year says tariffs should reflect actual costs.
“The rationale is that cost-reflective tariffs allow users of services to make the most rational decisions regarding the use of such services, thereby promoting economically efficient consumption,” the policy says.
NamPower says it is aiming to align its fixed operational costs with the amounts approved in tariffs to make the company’s finances more sustainable.
“This application is the first step in aligning fixed operating costs with NamPower’s actual cost expectations for the financial year 2027, representing 6.5% of the proposed increase,” NamPower said yesterday.
An additional 1.5% increase is driven by increased prices for imported electricity, power purchased from independent power producers and fuel for the company’s power stations.
In order to entirely cover its costs, NamPower would need an increase of 30% in its tariffs. This reflects the costs of new assets, such as the Sores |Gaib solar power plant.
“To avoid putting too much financial pressure on customers, NamPower is deferring all under-recoveries and a large part of return and depreciation costs. By doing this, NamPower can gradually move towards prices that better reflect the real cost of supplying electricity, while still considering what our customers can reasonably afford,” the notice says.
If the ECB approves the tariff increase, the average bulk tariff will increase from 206.11 c/kWh to 223.40 c/kWh.
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