ERA cuts electricity prices for domestic consumers
Kampala, Uganda | THE INDEPENDENT | The Electricity Regulatory Authority-ERA has reduced power prices for domestic consumers.
Between April and June 2020, Ugandans will consume electricity by at least one shilling less than what they paid in the quarter between January to March 2020.
According to the ERA, domestic users – where ordinary Ugandans fall – will pay Uganda Shillings 750.9 per unit down from Uganda shillings 751.7. This is a 0.8 shillings drop.
While the cut for ordinary domestic consumers is negligible, commercial consumers will see theirs drop by at least 3.8 shillings to 645.6 shillings in the period between April and June 2020, a significant relief for business people.
However, the shutdown of the economy due to Covid-19 means they too can’t consume because many of them are not working. The bigger factories – classified as big consumers – also had a cut of Uganda shillings 1.4 to Shs 361 per unit.
ERA uses different parameters to determine the electricity tariff for a particular quarter, including exchange rate, prices of oil and inflation levels. The Uganda shillings lost up 2.2% of its value in March to trade in the highs of 3,900 for one dollar, according to Bank of Uganda.
It has since gained some losses to trade in the ranges of Shs 3800 for a dollar. How the dollar pairs with the shilling are impact factor in the tariff because distributing and generating companies import materials to invest using the dollar. If it becomes more expensive, it means power tariff will likely move up.
Also, the price of oil is considered. ERA says they used the average price of USD50 of February. The oil is used to run some of the machines for generation but also geothermal backup companies like Jacobsen depend entirely on oil.
A sustained fall in oil prices could push electricity tariff down although the uncertainty around Covid-19 means ERA may trade carefully to cut.
While President Yoweri Museveni had said utility suppliers should not be disconnected for non-payment, those on the pre-paid metering system have no option but to pay when their units run out.
The system simply cuts one-off when their units expire.
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