Uganda’s electricity regulator, ERA has reduced the cost of electricity to the domestic user by UGX 3.04 cents per unit effective July 2021 for the next three months.
In a media statement, the Electricity Regulatory Authority (ERA) approved new End-User Tariffs to be charged by Umeme Limited for the supply of Electrical Energy in the Billing Period from July to September 2021.
Apart from the street lighting category whose cost remains at UGX 370, the End-User Tariffs schedule indicates a reduction across all the Consumer Categories.
According to the New Tariffs, Domestic Consumers will still pay UGX 250 for the First 15 Units under the Lifeline Tariff and thereafter pay UGX 747.5 for the next Units purchased. This is lower than the UGX 750.9 which has been charged in the previous quarters. Commercial Consumers will pay UGX 616.6, which is UGX 23.2 down from the tariff for the quarter ended June.
The Medium Industrial Consumers have got the largest decrease UGX 29.1 in the cost of the electricity they will be using, which now falls to UGX 526.9, while the large Industrial Consumers will pay UGX 355, a drop of UGX 6.
The Extra-large industrial category consumers will pay 300.2 Shillings which is less than the previous by 1.5 Shillings.
The approved Electricity End-User Tariffs represent a Weighted Average Reduction of 2 per cent, relative to the Tariffs of the Second Quarter of 2021.
The Commercial Consumers and Medium Industrial Consumers are the biggest direct beneficiaries of the reduction in Tariffs, with an average reduction of 26.15 Shillings per unit.
“The reduction in the tariffs of these two categories is a deliberate effort by the Electricity Regulatory Authority to support the Small and Medium-sized businesses to recover from the adverse effects of the COVID-19 Pandemic, thereby contributing to the recovery of the economy,” says Engineer Ziria Tibalwa Waako, the ERA Chief Executive Officer.
According to ERA, the New Tariffs apply to all Electricity Consumer Bills raised by Umeme Limited, based on Meter Readings and Yaka purchases taken in the period July to September 2021.
In line with the quarterly tariff adjustment methodology that was approved by ERA in 2014, the Authority sets out an Annual Base Tariff at the beginning of each calendar year.
The Base Tariff is adjusted by ERA every quarter to provide for changes in the Macro-Economic factors, namely: the Consumer Price Index, the Exchange rate of the Uganda Shilling against the United States Dollar, International Fuel Prices, and the Energy Generation Mix (from the assumptions used in the determination of the 2021 Base Tariffs).
ERA says they agreed with the Umeme to reduce the tariffs because of the changes in the factors that influence the cost of doing business, like the appreciation of the Uganda shilling against the dollar.
“In the Second Quarter of 2021, the Uganda Shilling appreciated against the United States Dollar by 3.3%, having also appreciated by a high 4.1% in November 2020, which was used to determine the Base Tariffs for the year 2021.”
The tariffs have also been affected by the increase in the international crude oil prices for May 2021 to US$ 66.91 per barrel, compared to US$ 40.08 per Barrel used in the determination of the Base Tariffs for 2021.
Umeme expects the Uganda Electricity Transmission Company Ltd to purchase from UEGCL, a total of 1,220.32 Gigawatt hours of electricity for the quarter.