There are power blackouts in some areas in the country because of Planned outages, Unplanned outages, overloaded transformers (due to new developments and increased households in some areas that cause power to trip from time to time), power theft/illegal connections, vandalism of electricity equipment in some areas across the country, and failure to maintain the power corridors by the licensees. All these as well as trees falling on the power lines and breaking conductors cause power outages.
Umeme buys electricity at an average tariff of Ush 290 per kWh and sells to customers at a weighted average tariff of about Ush 504 per kWh. The difference between the two tariffs is the distribution price which recovers the approved costs of running the distribution business; including the recovery of investment costs (recovery of invested amounts and the return on investment).
The electricity tariff has a local currency component as well as a foreign currency component. The electricity tariff is meant to recover costs of investment as well as costs of operation and maintenance (O&M). Most of the investment costs and a portion of the O&M costs of electricity service are denominated in United States Dollars. By implication, most loan repayments and recovery of invested equity are made in United States Dollars to foreign financiers while a proportion of operation and maintenance inputs are also imported. Therefore, in times when the exchange rate is changing, the Uganda Shilling amount to be collected from customers for purposes of meeting investment and O&M-related obligations need to change to realize the target United States Dollar amount, hence the foreign exchange adjustment.
About 2.6% of the energy on the national grid is generated from thermal sources using mainly Heavy Fuel Oils (HFO). The generation pricing of thermal power takes into account the cost of fuel on the international market. Therefore, when the price of fuel on the international market changes, the price paid by the consumer needs to be adjusted to enable the recovery of generation costs.
Every month, every customer in the domestic category is allowed 15 units of power at the lifeline (subsidized) tariff of Ush 250 per Unit (kWh). Besides, every customer is required to pay a monthly standing charge of Ush 3,360. Therefore, the first time a customer purchases electricity units in a month, the customer receives subsidized units but also a deduction is made for the monthly standing charge. However, if a customer makes further purchases before the same month ends, the customer will buy units at the normal tariff (non-subsidized and also with no other charges except VAT). Therefore, the major reason why kWh units vary between the first purchase in a month, and subsequent purchases is the lower cost of the first 15 units and the monthly standing charge.
Electricity service is associated with huge amounts of fixed costs. Unlike other services like telecom where the infrastructure is available to everyone, electricity installations are exclusive to a customer at a service delivery point or in a given location. Once fixed costs have been incurred, the installation is exclusive to a given customer or customers in a given location. Fixed costs have to be recovered irrespective of the level of consumption/amount of electricity consumed. If the costs are not recovered from the customers to whom they are attributed, the costs would still have to be recovered from energy consumed by other customers. This would be unfair and encourage inefficiency. Therefore, fixed charges help recover fixed costs and also help send a signal for efficient allocation and use of resources.
Electricity infrastructure (generation plants, and network assets) are available to be utilized almost uniformly across a 24-day cycle. However, these assets have a limited capacity as to the amount of electrical load carried. Therefore, efficient utilization of these resources requires that as much energy from these assets is made available for customers so that the costs of these assets is spread across more output (energy). Energy from these assets can be best maximized if the highest reasonable capacity is utilized every hour of the day.
Therefore, customers are encouraged either to consume evenly across every hour of the day or even reduce consumption during peak periods. However, given that domestic customers are only mainly at home (and awake) at peak time, the electricity utilization of domestic customers is maximum at the peak, and these customers have minimal flexibility to increase their consumption at a non-peak period. It may, therefore, be unreasonable to subject domestic customers to ToU signaling.
Besides, domestic customers in Uganda use electricity for limited applications which limits the need to roll out expensive ToU metering devices that impose a significant additional cost.
Tariffs are determined and approved based on customer classes/categories. Different customer categories are supplied with electricity at different voltages and are, therefore, associated with different energy losses. Besides, domestic customers consume less energy compared to industrial customers. Based on the foregoing, industrial customers are associated with lower costs of service per unit of energy supplied and, therefore, a lower tariff.
No. Although some countries in East Africa have lower tariffs than the tariffs in Uganda in some customer categories, especially because of direct government subsidies in those countries, the electricity tariff in Uganda is not the highest. Specifically, of the five East African countries, the tariff for street lighting is lowest in Uganda while Uganda’s tariff for extra-large industrial customers is the second-lowest after Tanzania. For the avoidance of doubt, there is no customer category for which the Ugandan tariff is highest in East Africa.
No. The Electricity Regulatory Authority approves costs for Umeme applicable over seven years and recovered through the tariff. The approved costs constitute a target and a maximum that is recoverable through the tariff. The actual salaries paid by the distribution company to its staff may depend on company objectives and the company’s internal staff motivation framework. Given that Umeme is a private company and makes earnings from its net investments into the sector, the company may afford to pay its staff salaries in a way that enables the company to achieve the set targets. However, costs above the set approved limits are not recovered through the tariff.
Electricity transmission and distribution service are associated with losses even for the most realistically efficient operator. Therefore, it is prudent and reasonable that a distribution company is allowed costs to cover a reasonably determined and approved target level of energy losses. It is important to note that there is a limit on recoverable energy losses. Not all energy losses are allowed to be recovered through the tariff and besides, energy losses need to be differentiated from the company’s losses on the profit and loss account (income statement). No utility is compensated for financial losses on the income statement.
The Electricity Connection Policy, also known as the free connections program is a project which is funded and managed by the Government of Uganda through the Rural Electrification Agency (REA) to cover the cost of the last mile connection for customers requiring no-pole or one-pole service. Customers, therefore, receive a 100% subsidy (free connection) for no pole or one-pole connections and are only required to pay UGX. 20,000 for inspection of customer premises. The inspection is required to confirm that the premises to be electrified have undergone appropriate electrical wiring by a certified technician and are ready for connection to the electricity grid.
The customer is required to make a formal report after which the distribution Company sends its officials to investigate by visiting the location to validate the customer’s claim.
If the claim is valid and there’s a meter available for replacement, the meter will be replaced, however, the customer bears the cost of replacement as preserved in the Regulations that upon the loss or damage to a meter, replacement of such meter (if available) takes a minimum of two weeks from the date of an investigative report by the distribution official.
Alternatively, the Customer may be placed on direct supply and estimation for the period before replacement.
It is not possible to track a stolen meter but where it is installed can be detected. This is usually triggered by a report of the inability to vend energy by the customer.
It can also be detected if the meter is a smart meter since the process that involves getting a new smart card requires that the customer data is validated before issuing another one.
Yes, a stolen meter can be used by another person but not legitimately if there’s internal connivance from a staff of the distribution companies. However, this is a highly punishable offense and every customer/electricity user is advised not to use a stolen meter on their premises as it attracts a punitive penalty.
A back bill is a catch-up bill sent by a distribution company when you have not been correctly charged for your energy use, and a fraud bill is a penalty imposed on a customer for tampering and or bypassing a meter or outrightly stealing electricity using any method. Its usually quite punitive and can rundown a business. Electricity customers are therefore advised to stay away from electricity theft of any form.