Electricity prices down 1.5% in second quarter

Umeme, the power distributor, will reduce the prices of electricity by 1.5% in the second quarter of 2017, in line with a tariff adjustment by the Electricity Regulatory Authority.

The ERA cites a stronger shilling and a favourable energy generation mix for the slight fall. Energy prices were raised by an average of 9.2% in the first three months of this year relative to the tariffs of the fourth quarter of 2016.

Domestic consumers will be charged 1.4% less than what they paid in the first quarter, with their tariff falling to Shs687.1 per unit from Shs696.9. Commercial consumers are to pay Shs620.9 versus 629.0 in Q1.

The tariff for medium industrial consumers fell 1.4% to Shs569.7, while that of large industries and extra large industries declined by 1.6% to Shs370.2 and Shs366.9 respectively. The last category, street lighting, will be charged Shs671.2, 1.3% less than the previous quarter.

Energy prices are adjusted every three months by the regulator taking into account changes in inflation, foreign exchange rates, and fuel prices. The resultant tariffs, charged by Umeme, reflect the costs of power purchase and the costs of distribution and retail supply.

Due to a rise in inflation, the inflation adjustment factor was positive across all categories, ranging from Shs0.6 per unit to Shs1.5 per unit. An increase in international fuel prices also saw a modest rise in the fuel adjustment factor.

The shilling’s strengthening against the dollar as at 28 February and a favourable change in the energy generation mix – the share of the different energy sources in the electricity supplied by Umeme – had a larger impact on the final tariffs, and were responsible for the fall in prices.

The ERA was summoned to Parliament in January to explain the higher tariffs charged for the last quarter. Parliament’s Natural Resources Committee said it had received complaints from the public about the increased prices.