Why do consumers pay for Umeme energy losses?
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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.