Electricity prices to fall further in third quarter

Power prices are to reduce for the second consecutive quarter due to a stronger shilling and lower fuel prices, according to a tariff schedule released by the Electricity Regulatory Authority.

In the third quarter, electricity prices are to fall by a weighted average of 1.7%, compared to a 1.5% reduction in the second quarter. The change in quarterly tariffs is relative to the base tariff for 2017 charged in the first quarter.

Domestic consumers are to pay Shs686 per unit, which is 1.6% less than the base tariff of Shs696.9. On the other hand, commercial consumers are to be charged 1.5% less than what they paid in the first quarter, their tariff for Q3 set at Shs619.6.

The tariff for large industries and extra large industries is to drop by 1.9% to Shs369 and Shs365.8 respectively. That of medium industrial consumers is to fall to Shs568.8 from Shs577.8 in the first quarter, while street lighting tariffs are to fall 1.4% to Shs670.

Umeme, the national power distributor, incorporates the tariffs and other charges – the costs of purchasing power from the generator, plus distribution and retail supply costs – when billing customers.

The regulator adjusts energy tariffs every quarter in line with changes in inflation, foreign exchange rate, international fuel prices, and the energy generation mix.

The Uganda shilling appreciated by 0.76% against the US dollar as at the end of May 2017 compared to the base period, leading to a negative foreign exchange rate adjustment factor for all consumer categories, according to the tariff schedule. A reduction in the international oil price and change in the energy generation mix also resulted into a negative fuel adjustment factor.

An increase in core inflation and the United States producer price index, however, led to a positive inflation adjustment factor across all consumer categories, even though this was offset by the exchange rate and fuel adjustment factors.