Electricity Tariffs to Drop Below Govt’s Proposed 14%

Citi Business News is learning that government’s proposed reduction in electricity tariffs for consumers may not yield much as expected as the Public Utility Regulatory Commission (PURC), finalizes its tariff adjustment for this year.

Government in the 2018 budget suggested that it is working to reduce tariffs by some 14 percent on the average, for industrial and residential users.

But information available to Citi Business News rather points to a marginal drop in the tariffs.

Documents sighted by Citi Business News indicate that the PURC is proposing a 12.54 percent reduction in tariffs for businesses.

According to the utility regulator, this is premised on two grounds; the first is that, the PURC will remove the 5 percent Benchmark provision for tariffs that have been in default to the various utility companies such as ECG, VRA, NEDCo, enclave power, among others.

The second reason for the PURC’s proposed reduction is that there has been about 32 percent increase in consumer base from 3.5 million to 4.7 million between 2015 and presently.

However, earlier stakeholders’ consultations have all shown that the various providers are pushing for an increase in their allocations.

For instance, NEDCo proposed about 200 percent increase in tariff likewise did the power distributor; VRA, enclave power, among others.

According to documents available to Citi Business News, the end user tariffs comprising Bulk Generation, Transportation and distribution service charges will inch up by some 27 percent; from 64 pesewas per kilowatt hour to 81 pesewas per kilowatts hour.

But Citi Business News understands that the decision by the PURC to scrap the 5% benchmark provision will have to be reviewed as it is likely to have dire consequences on the power distributors as they risk huge financial losses over unpaid debts.

It is still unclear when the new tariffs will be announced but industry watchers are hopeful the final decision should be made within the next few days.