Energy Regulations Board (ERB) offices
Energy Regulations
Board (ERB) offices

Energy regulation Board has allowed Zesco to adjust upwards the electricity tariffs from the average of 37 ngwee to K1.13 ngwee per kilowatt effective midnight Wednesday.

The board says the electricity tariffs are according to the cost of supply for each specific customer category which range from the residential, services, commercial and maximum customers.

The board has further disclosed that the fixed monthly charge for residential customers remains unchanged at 18.23 kwacha.

The proposed tariff adjustment is also expected to generate revenue that will facilitate investment of 3.7 billion USD in generation projects by adding capacity of 1500 mega watts to the national grid.

The board has also directed ZESCO to reduce allocation of subsidized electricity to ZESCO staff from 2000 kilowatts –hours 300 kilowatts –hours per month.

ZESCO recently applied to ERB to have the electricity tariffs adjusted upwards due to the economic environment that has worsened by the drastic hydro power generation capacity as a result of low water levels.

Below is the full ERB Statement

Press Statement

STATEMENT ON ELECTRICITY TARIFF ADJUSTMENTS

1. INTRODUCTION

On 24th August, 2015 ZESCO made an application to the Energy Regulation Board (ERB) for a tariff adjustment in conformity with the Electricity Act – Section 8(2), Chapter 433 of the Laws of Zambia. The application was to increase electricity tariffs for its various customers.

This tariff application has been made in a challenging economic environment. The situation has been worsened by drastic reduction in hydro power generation capacity as a result of low water levels. This has caused a severe energy deficit necessitating the importation of emergency power at a huge cost to Government. This is so because ZESCO by itself cannot afford to meet the high cost of imported emergency power on account of low electricity tariffs.

The other factors that have necessitated the tariff adjustment include the following:

New investment

The proposed tariff adjustment is expected to generate revenue that will facilitate investment of US$3.7billion in generation projects thereby adding capacity of 1,500 Mega Watts to the national grid.

Low tariffs

ZESCO has signed Power Purchase Agreements (PPAs) with Independent Power Producers (IPPs) at tariffs higher than existing average tariffs. With such a situation, ZESCO could default on the monthly payments to the IPP, if tariffs were not adjusted. The current average tariff ZESCO is paying to purchase power from IPPs ranges from 7 to 13.23 US cents per kilowatt hour and yet current average tariff is 6 US cents per kilowatt hour.

Macroeconomic factors

Energy supply costs and revenues are affected by changes in macroeconomic factors such as inflation, exchange rate, interest rates and the operating environment. In the recent past, the country has seen marked deterioration in these factors which has resulted in escalating operational costs for ZESCO without corresponding increase in tariffs.

2. NEW APPROVED TARIFFS

In view of the foregoing, tariffs for residential, social services, commercial and maximum demand customers have been adjusted upwards by various margins according to the cost of supply for each specific customer category. The detailed outlook of the new tariffs in absolute terms is as follows:

A. METERED RESIDENTIAL CUSTOMERS

There has been a change to the residential tariff structure where the life-line consumption band has been revised however; the tariff remains unchanged at 15 ngwee per kilowatt-hour. The life-line consumption band has been revised upwards to 0 to 300 kilowatt-hours per month from the current 0 to 100 kilowatt-hours to enable low income households have access to electricity. Below is a regional comparison of regional lifeline consumption bands which shows that the Zambian low income household is relatively in a better off position:

Table 1: life line consumption bands in selected African countries

No.

Country

Life line Consumption Band

Ghana

0 to 50kWh per month

Kenya

0 to 50kWh per month

Mozambique

0 to 100kWh per month

South Africa

0 to 50kWh per month

Tanzania

0 to 50kWh per month

Zimbabwe

0 to 50kWh per month

Malawi

Not applicable

Uganda

0 to 15 kWh per month

Lesotho

Not applicable

Additionally, the fixed monthly charge for residential customers also remains unchanged at K18.23. The tariff measures on residential customers will enable the underprivileged to benefit without over compensating those who are able to afford the power. The tariff reviews for residential metered customers are as follows:

Table 2: Metered Residential Tariffs

CATEGORY

Current tariffs

Approved new Tariffs effective 2015

(K)

Absolute Change

(K)

(K)

  1. METERED RESIDENTIAL (Prepaid) (capacity 15 kVA)

R1 – Consumption band up to 300kWh per month.

Energy charge/kWh

0.15

0.15

0.00

R2 – Consumption above 301kWh per month

Energy charge/kWh

0.51

1.54

1.03

Fixed Monthly Charge

18.23

18.23

0.00

  1. COMMERCIAL TARIFFS

Table 3: Commercial Tariffs

CATEGORY

Current tariffs

Approved new Tariffs effective 2015

(K)

Absolute Change

(K)

(K)

2.COMMERCIAL TARIFFS (capacity 15kVA)

Commercial

Energy charge/kWh

0.31

0.88

0.57

Fixed Monthly Charge

55.09

156.47

101.38

  1. SOCIAL SERVICES

Table 4: Social Services Tariffs

CATEGORY

Current tariffs

Approved new Tariffs effective 2015

(K)

Absolute Change

(K)

(K)

3. SOCIAL SERVICES

Schools, Hospital, Orphanages, churches, water pumping & street lighting

Energy charge K/kWh

0.28

0.81

0.53

Fixed Monthly Charge

47.91

139.41

91.5

  1. MAXIMUM DEMAND CUSTOMERS

Table 5: Maximum Demand Customer Tariffs

CATEGORY

Current tariffs

Approved new Tariffs effective 2015

(K)

Absolute Change

(K)

(K)

4. MAXIMUM DEMAND TARIFFS

MD1 – Capacity between 16 – 300 kVA

MD charge/kVA/Month

13.97

48.05

34.08

Energy charge /kWh

0.20

0.70

0.50

Fixed Monthly Charge

136.82

470.65

333.83

Off-peak MD charge//kVA/Month

6.98

24.03

17.05

Off-peak energy charge/kWh

0.15

0.52

0.37

Peak MD charge//kVA/Month

17.46

60.06

42.60

Peak Energy Charge/kWh

0.25

0.87

0.62

MD2 – Capacity 301 to 2,000 kVA

MD charge/kVA/Month

26.13

89.90

63.77

Energy charge /kWh

0.17

0.58

0.41

Fixed Monthly Charge

273.62

941.25

667.63

Off-peak MD charge//kVA/Month

13.07

44.95

31.88

Off-peak energy charge/kWh

0.13

0.43

0.30

Peak MD charge//kVA/Month

32.67

112.37

79.70

Peak Energy Charge/kWh

0.21

0.72

0.51

 

3. IMPACT ANALYSIS

In terms of impact on household expenditure consumers will experience marginal changes. For example, for households consuming 100 kilowatt-hours per month, their monthly expenditure will not increase but remain unchanged. Meanwhile, for households consuming 300 kilowatt-hours per month which is the consumption level for most low income households, their monthly expenditure will decrease by K38.23. Further, for households consuming 500 kilowatt-hours per month, their monthly expenditure will increase by K231.79.
Furthermore, it is understood that the new tariff will be a challenge to small businesses and commercial clients; however it is unavoidable if we are to continue having power. Industries will therefore be expected to put in place effective energy management measures including power factor correction measures.

In an effort to provide for equity in carrying the tariff burden, the Government is in the process of engaging the maximum demand customers so as to ensure that all consumers of electricity pay revised tariffs.
The much needed investment in the power sector has been lacking due to low tariffs, and Zambia at current average tariff of 6.02 US cents per kilowatt-hour ranks among the countries with the lowest tariffs in the region. This is in comparison with countries like Tanzania, Swaziland and Zimbabwe whose tariffs are at 16.8 US cents; 10.9 US cents; and 9.8 US cents per kilowatt-hour respectively.

With the new increment Zambia’s tariff will average 10.35 US cents per kilowatt-hour, which will be close to the regional average of 10 US cents per kilowatt-hour. At this tariff, Zambia will become competitive and will attract the much needed investment in electricity sub sector.

4. REGULATORY DECISIONS

The following regulatory decisions have been made with regard to ZESCO’s application to adjust electricity tariffs in 2015.

a) The electricity tariffs for residential, services, commercial and maximum demand customers have been adjusted upwards by various margins according to the cost of supply for each specific customer category. Tariffs for the various customer categories have been increased from an average of 37 ngwee to K1.13 per kilowatt-hour, that is, 6 US cents to 10.35 US cents per kilowatt-hour;

b) The tariff structure for residential customers has been altered to include a life-line consumption band (R1) of up to 300 kilowatt-hours per month. For this consumption band, the tariff will remain at 15 ngwee per kilowatt-hour;

c) Additionally, the fixed monthly charge for residential customers remains unchanged at K18.23;

d) During the Public hearings, concerns were repeatedly raised about the allocation of subsidised electricity units to ZESCO staff. While recognising that the staff tariff is a condition of service, the current challenging environment calls for all stakeholders including ZESCO to sacrifice. In this regard ZESCO is hereby directed with immediate effect to reduce this allocation to its staff from the current 2,000 kilowatt-hours to 300 kilowatt-hours per month;

e) ZESCO must immediately start implementing demand side management measures which include, among other things, the following: Power Factor Surcharge; migration of all customer meters to Time of Use (ToU); implement the use of energy saving bulbs; and install ripple control system for electric geysers;

f) ZESCO is further directed to start a programme of tariff differentiation for the poor starting with the rural consumers;

g) ZESCO is also directed to devise sustainable strategies and systems that are aimed at improving service delivery and enhancing operational efficiency including reducing its staff costs as a proportion of total operating and maintenance costs. Along this line, ZESCO is directed to strictly adhere to the performance benchmarks which have been agreed upon with the Energy Regulation Board;

h) ERB has established an Electricity Strategic Fund (ESF) which is meant to generate sustainable funding for the electricity sub-sector. The ESF, will among other things, provide for infrastructure development and also facilitate emergency power imports. ZESCO is hereby directed, to immediately start remitting one per cent (1%) of the additional revenue to be realised from this tariff adjustment into the fund; and

i) The proposed tariffs and allied directives are effective midnight tonight (Midnight of 2nd December 2015).

By Order of the Board

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48 COMMENTS

  1. although we knew this is one of increments coming our way, I still think this increment is not a solution in itself but just one of the cogs out of the thousands that have brought us to e here we are

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    • @Nostradamus
      indeed! its difficult, i also dont understand why ZESCO in ambia is being compared to `ZESCO“in Ghana and those other countries

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    • During his first presidential address to parliament, Mr Lungu lied to us that the life-line limit will be increased to 500 units. They have only increased it to 300 units.

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    • Dandy Crazy, who has now been kolopad between PF supporters & UPND supporters you derided?

      I don’t think you sung & hoped for self-Kolapaling. Its more painful when a shot /strike aimed at an opponent boomerangs & causes self-inflicted pain.

      Our President is working hard in emulating the late “Great Leader’s vision”, ‘more money out of your pocket’!

      Next increment is fuel & then automatically all price increments fall in place.

      Enjoy your Music of Wako Ni Wako whose only homes are being spared!

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  2. pf grz very soon you will hear of walking tax where citizen will be charged for walking on zambian roads

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    • @jemason.kekekeke thats true ,it was the rent house tax,and now its the tarrifs.many bloggers on this site questioned how the pf govt will get the money to pay the interest on all the loans ($7 billion +)acquired within a short period and now this is the results.And when the opposition political parties raised alarm the we were called haters,bitter and losers but where is zambia now?Dark days lay aheard,HH said in march 2015.

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  3. Comment:) During the Public hearings, concerns were repeatedly
    raised about the allocation of subsidised electricity units to
    ZESCO staff. While recognising that the staff tariff is a
    condition of service, the current challenging environment
    calls for all stakeholders including ZESCO to sacrifice. In
    this regard ZESCO is hereby directed with immediate effect
    to reduce this allocation to its staff from the current 2,000
    kilowatt-hours to 300 kilowatt-hours per month;

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  4. Residential customers are also affected coz all essential commodities will go up and will meet and the other end will the very person called the residential customer who is said not to have been affected.Think logically u pipo pls.What do u use to think coz i doubt if you use brains.

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    • Very true. Why say they are unaffected when they will have to face higher prices of goods due to higher production costs. This is a loss- loss for the ordinary citizen. Even the money generated from these high tariffs will end up in the pockets of the few. We are not new to Zambia. We all know how Zesco money has been abused by politicians in the past….Funny that residential consumers are “unaffected”

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  5. Comment:though this might be good in the long run but currently with our economic woes such measures will trigger commodity price hikes.Was it the right time to effect such measures? I guess each one has their own opinion but mine is that its a right move done at a wrong time

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  6. Ala bane let’s not be fooled, everyone is affected, whether residential or commercial, we are all affected. The adjustment will boomerang and the effects will overspill unto the poor. Tighten your belts fellow country men wait for the fuel increment and insala ikalipa mu rain season.

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  7. How on earth were they letting Zesco to subsidise electricity to members of staff…this is just recklessness and unheard of its no wonder this govt firms lamentably fail to record profits.
    What’s ERB’s position on investors coming in the sector as Zesco will not buy from them if they are going sell to consumers at a loss?

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  8. Where has the ERB been all this time?? We should scrap ERB as they are getting free money. They are simply mouth pieces and do not regulate anything. Only after two weeks from the presidential directive they are able to repsond to an application lodged in August!!! (please don,t talk about consultation either!!) A no of issues addressed in this statement have been pending for years, and did not need governments intervention
    Also, what about the other MD bands?? Even if there was no increase, we needed to see them. ERB hiding information. Typical African mentality. How was Itezhi Tezhi developed then if 6usc/kWh cannot attract investment?? How was Kafue Gorge lower launched, if 6usc/kWh cannot attaract investment?? Please educate some of us we dont know. Otherwise this is about what…

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  9. This just want to cover for the loss of revenue ZESCO is losing during the eight hours of loadshedding each day . They are just trying to collect cash to equate the 24hrs of power generation . They dont want the company to feel the impact of low power generation. You cant raise capital by increasing the price of a comodity if you want to recapitalise a company you either raise capital on the capital markets or you get a loan.

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    • You speak wisely my friend. Its high time Zambians rose up and demanded for high accountability and transparency from these institutions like Zesco. Who has seen Zesco’s annual statement and let alone the annual report? I would personally have no issues with any adjustments if Zesco can be more transparent and accountable. I do not want my money being used for stup1d political campaigns. Let them start publishing their financial reports and statements. Good corporate governance demands this.

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  10. That is why there is no serious GRZ drive to convert the public to solar power panels as this will deprive the GRZ cash cow ZESCO of revenue. However households will have more disposable income to help the economy if they use solar panels for day time consuption.

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    • Excellent point, @Patrick. This has been my rallying cry, too. If we can begin to decentralize towards individual empowerment our country will make a leap forward. This habit of transferring monopoly from one form to another must stop. Government has a lot more to worry about than maintaining a stranglehold on unnecessary things. Paradoxically the freedom you advocate will actually generate more income for government!

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  11. It is wrong to say for households consuming up to 300 KW-hours their expenditure will decrease by K38.23. How? When the consumption up to 300KW- hours remains unchanged at K0.15 per KW-hour. Can u justify where the decrease is arising from?

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  12. The increase in commercial tariffs will lead to increased cost of production which in turn will lead to increase in prices of goods and services. The already overburdened consumers will suffer more. Producers of goods and services will certainly pass on the cost to consumers.

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    • Iwe mumbwe HH is not using tax money to run his business. So why should he be the one to subsidise electricity? Some of you minions are so dull that your thinking is worse than that of a donkey.

      If you want anything you are doing now to bear fruits you must vote UPND which has the capacity not only to stabilise the kwacha but to also make it appreciate to the levels mwanawasa left it.

      PF has failed and just kicking the can down the road. What has over $10 billion PF has borrowed done for this country? The money has all been privatised and put into their personal accounts abroad.

      Vote UPND 2016.

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  13. Why is the percentage increment not disclosed? An average increase to k1.13 from k0.37 per kWh gives 205% ? Is this scary figure correct or it’s my maths. Help.

    More misery in my pockets!

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  14. I would like to see ZESCO’s revenue requirement model to understand the justification for this raise.

    If indeed making up for the loss in revenue is the goal, I would suggest increasing access fee. It is less painful to the consumer as it does not vary with the level of consumption.

    Outside of this thought, I am inclined to imagine that the deficit in revenue is quite astronomical.

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  15. Supernova, you are indeed correct. The over-clever spin-doctors have given their figures showing the Kwacha increase, but not the % increase. The 205% increment is not across all tarriffs some are 235%.

    This against the backdrop of reported inflation of 19% per annum.

    Why is Zesco allowed to follow the dollar, whereas the Govt blasts any business, landlord, farmer, shop-keeper who tries to adopt the same attitude. Donchi kubeba.

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    • With Chikwanda predicting an inflation rate of 7% in his BUDGET???

      We have to get rid of this delusional OLD F00L!

      PF 90 days LIES got them elected but the truth is now out. They cannot hide the FACT that they have destroyed the whole countries ECONOMY!

      After BORROWING 10 BILLION DOLLARS they now have to raise electricity prices over 200% to find money to fix the load shedding problem THEY MADE by cancelling the contracts in 2011!

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  16. My concern is that ZESCO is not producing enough power to cater for residential houses or commercial units. This load shedding prevents people from using electricity when they need it. Around Lilayi there is no electricity from 07:00 to 15:00 hrs which means when it is reconnected people have already used charcoal. It only powers TVs and fridges which means the electric metres are almost static. They can’t make money like that. Not only that people have massively bought gas stoves which is cheaper for them. One thing they could have done is to sell ERB house and invest money somewhere else. Why do they need a very building like that when a lot of their workers are in provinces or districts. Secondly the government must stop interfering the operations of the company. If Zesco is…

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  17. Ba vm.

    Didn’t you hear the President’s speech ? No more subsidies. But now you are telling HH to subsidise electricity. Please don’t go against presidential directives.

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  18. The board has further disclosed that the fixed monthly charge for residential customers remains unchanged at 18.23 kwacha. The only one that matters.

    Viva President Nawakwi.

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  19. Thats what you get from a party with a wrong focus…PF wrongly chose to supercharge politics instead of supercharging economic growth and productivity.

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  20. Ripple,more than tripple effects will be felt!!Copperbelt,Lusaka, you people along the line of rail, where is the more money in your pockets?reduced taxes or full employment?!Kharma is a b#*ch!!pa bwato!!

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  21. When is BB 2016 coming LT? Was it a one year wonder or is it biannual or is it meant to be an election time event for the election fever pitch? Was it orchestrated by Mushota who went on to win it and now she wants to be wamuyayaya? African events don’t last do they Donald Trump?

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  22. Finally ZESCO employees get to understand how it feels to pay for electricity. For those of us who consume more than 300kw, we should brace ourselves for more hardship.

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  23. Misleading headline: are you sure residential tariffs remained unaffected? About the R2 – Consumption above 301kWh per month which was increased by K1.03?

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  24. HE Edgar Lungu had said in February this year that no increments to zesco tariffs for two years. This is yet another Unfulfilled promise. How long shall we be cheated?

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  25. Okay PF please do the same comparisons when you increase our fuel prices. This thing of comparing yourself to your equally corrupt and disorganized neighbours is becoming irritating. Ati its global, even in South Africa its the same. So what!!! I am not in South Africa!!!!

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  26. Next is fuel. More poverty coming our way. The cost of production will go up and the price of goods and services will sky rocket. Am seeing riots very soon in Zambia. Am seeing food prices shooting up and that will be the end of the so called peaceful nation. Politicians have taken Zambians for granted for a very long time.

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  27. Does this mean the loading shading is coming to the end?
    Why does ZESCO, year in year out, always have to transfer its inefficiency to the people and justify the increase on macroeconomic factors? The mismanagement at ZESCO mirrors Lungu’s government. The increase is to support the unsustainable lifestyles at ZESCO the superstructure called ERB. Remember ZIMCO? The reasons put forward are all excuses by people always bent on looting without consideration to the bad state of the economy and the suffering of the people.

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  28. I wish to suggest that Grz should encourage people to be using energy saver bulbs, gas stoves, solar gysers and solar energy in general so that Zesco should remain supplying power to mining and other industries only. Grz should allow free tax on all the items I have mentioned above. Importers and dealers should be properly identified and their mark ups justified so that Zambians are not exploited. Give this option to run for two or three years, before you evaluate it. It is possible that after three years all domestic consumers will not need Zesco power. The company that will be producing gas and gas cylinders will need to be assisted to get imported materials tax free also for the same period. How about that GRZ?

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