REDs: Electricity profiteers or service providers?
• Regional distributors justify their charges
Pensioners in Windhoek spend more than regular residents in other towns, while Nored customers have to make do with one of the highest electricity tariffs countrywide.
Namibia’s status as a net importer of electricity has been blamed for the high power costs households are currently subjected to.
The regional electricity distributors (REDs) have also been accused of contributing to the exorbitant tariffs demanded across the country.
Compared to previous years, consumers have seen their spending on electricity skyrocket for less power.
A comparative study done by Namibian Sun indicates that pensioners in Windhoek spend slightly more than residents residing in low-income areas, while Nored customers have to make do with one of the highest electricity tariffs in the country.
Namibian Sun benchmarked the price of electricity per town and/or RED, and found out how much energy users get in terms of units for each N$100 spent.
The assessment did not take into account surcharges and additional levies payable to the National Energy Fund and the Electricity Control Board (ECB).
It was found that electricity users who generally receive less electricity in the form of amperes paid less.
The amount of amperes a residential unit is entitled to refers to how much electrical power it can use at any given time. Amperes, often referred to as ‘amps’, measure the flow of electric current. In a home, this relates to the number of electrical devices you can use simultaneously without overloading the system.
The numbers: Windhoek
Pensioners in Windhoek pay N$2.44 per kilowatt hour (kWh) of electricity, meaning N$100 will get a senior citizen residing in the capital 40.9 units of electricity.
Residents of Windhoek who have their electricity supply limited to only 20 amperes pay N$1.69/kWh. N$100 affords such users 59 units.
Windhoek residents who receive more than 20 amperes of electricity pay N$2.44/kWh, which translates to 40.9 units.
The numbers: Keetmanshoop
Moving south to Keetmanshoop - seemingly the land of milk and honey as far as electricity is concerned - pensioners limited to 15 amperes of electricity are charged N$1.50/kWh, receiving 66 units for every N$100 spent.
Normal residents are charged N$2/kWh of electricity, or receive 50 units for every N$100 spent.
The numbers: Okahandja
In Okahandja, special residents limited to 20 amperes are charged N$1.74/kWh, or receive 58.8 units of electricity for every N$100 spent.
Residents of the garden town under the special residents’ category receive up to 40 amperes of electricity supply and are charged N$1.96/kWh, effectively getting 51 units of electricity for every N$100 they spend.
While Okahandja falls under Cenored, it is not considered a proper customer as the municipality owns 60% of the RED.
The numbers: Cenored
Cenored charges a rate of N$1.95/kWh for residents who are limited to 20 amperes, or 51 units of electricity for N$100.
Other residents who receive in excess of 20 amperes are charged N$2.04/kWh, thus getting 49 units.
The areas Cenored covers includes Otjiwarongo, Otavi and Grootfontein.
The numbers: Nored
Nored, which serves various towns across north and north-western Namibia including the local authority areas of Ondangwa, Ongwediva, Rundu and Katima Mulilo, charges N$2.24/kWh for 15 amperes and N$2.57/kWh for 30 amperes for prepaid electricity.
For residents limited to 15 amperes, N$100 buys them 44.6 units, while residents who receive 30 amperes and above get 38.9 units for their N$100.
The numbers: ErongoRed
At the coast, ErongoRed - which serves Walvis Bay, Swakopmund and Arandis - charges N$1.53/kWh for prepaid meters up to 20 amperes, or 65.3 units of electricity.
Meanwhile, it charges N$2.55/kWh for prepaid meters in excess of 20 amperes, giving consumers 39 units of electricity.
Pensioners residing within the local authorities ErongoRed serves are positively pampered, paying N$1.49/kWh and getting the most bang for their buck - 67 units of electricity for N$100.
In Gobabis, tariff schedules are outdated, having been last updated in 2019, while no tariff schedule is available for envisaged green hydrogen hub, Lüderitz.
Not cost-reflective
According to Cenored spokesperson Charlie Matengu, the tariffs are not cost-reflective to support operations, but assist the RED in serving its customers.
“Our prices are justified, but it is unfortunate that the tariffs that we are charging are not cost-reflective because we are charging below what we are supposed to be charging and that is because we understand the predicament that befalls our customers, especially the low-income earners and the pensioners.”
Cenored effected the lowest price increase of all the REDs, taking into account prevailing economic conditions in Namibia, Matengu said.
“If you look at our tariff increases, we are the lowest, and that already tells you that we justify our tariffs. We looked at the status quo, we looked at the situation on the ground, and we realised that the people are already feeling the pinch such as rent, food, fuel... Everything else is going up, and so we are charging a tariff that is not cost-reflective,” he said.
Spokesperson Simon Lukas said Nored had no part in setting tariffs, a responsibility he said rested with the ECB.
According to spokesperson Benjamin Lukas, ErongoRed subsidises up to 23% of its customers, and ensures they paying less than it pays to bulk utility operator, NamPower.
“Despite the increase, as company, we have looked at all possible ways to cushion the impact on our customers whilst ensuring that service delivery is not compromised,” he said.
‘Sound economic principles’
ECB manager for economic regulation Pinehas Mutota explained that setting tariffs was within the domain of the Electricity Act.
“The regulation of electricity tariffs is carried out in accordance with Section 27, subsection (2) of the Electricity Act 4 of 2007 that mandates the ECB to exercise regulatory control over electricity tariffs.”
According to him, the ECB relies on the use the cost-plus methodology to determine tariffs.
“The methodology considers both the regulated allowed revenue requirement, which encompasses the operational costs of the utility and a regulated return on assets,” he said.
Tariffs were set in such a way that it remained cost-reflective, Mutota added.
“Tariff reviews are conducted in accordance with the existing government policies, which mandate that tariffs should be cost-reflective, reflect the long-run marginal cost of supply and be grounded in sound economic principles.”
The regional electricity distributors (REDs) have also been accused of contributing to the exorbitant tariffs demanded across the country.
Compared to previous years, consumers have seen their spending on electricity skyrocket for less power.
A comparative study done by Namibian Sun indicates that pensioners in Windhoek spend slightly more than residents residing in low-income areas, while Nored customers have to make do with one of the highest electricity tariffs in the country.
Namibian Sun benchmarked the price of electricity per town and/or RED, and found out how much energy users get in terms of units for each N$100 spent.
The assessment did not take into account surcharges and additional levies payable to the National Energy Fund and the Electricity Control Board (ECB).
It was found that electricity users who generally receive less electricity in the form of amperes paid less.
The amount of amperes a residential unit is entitled to refers to how much electrical power it can use at any given time. Amperes, often referred to as ‘amps’, measure the flow of electric current. In a home, this relates to the number of electrical devices you can use simultaneously without overloading the system.
The numbers: Windhoek
Pensioners in Windhoek pay N$2.44 per kilowatt hour (kWh) of electricity, meaning N$100 will get a senior citizen residing in the capital 40.9 units of electricity.
Residents of Windhoek who have their electricity supply limited to only 20 amperes pay N$1.69/kWh. N$100 affords such users 59 units.
Windhoek residents who receive more than 20 amperes of electricity pay N$2.44/kWh, which translates to 40.9 units.
The numbers: Keetmanshoop
Moving south to Keetmanshoop - seemingly the land of milk and honey as far as electricity is concerned - pensioners limited to 15 amperes of electricity are charged N$1.50/kWh, receiving 66 units for every N$100 spent.
Normal residents are charged N$2/kWh of electricity, or receive 50 units for every N$100 spent.
The numbers: Okahandja
In Okahandja, special residents limited to 20 amperes are charged N$1.74/kWh, or receive 58.8 units of electricity for every N$100 spent.
Residents of the garden town under the special residents’ category receive up to 40 amperes of electricity supply and are charged N$1.96/kWh, effectively getting 51 units of electricity for every N$100 they spend.
While Okahandja falls under Cenored, it is not considered a proper customer as the municipality owns 60% of the RED.
The numbers: Cenored
Cenored charges a rate of N$1.95/kWh for residents who are limited to 20 amperes, or 51 units of electricity for N$100.
Other residents who receive in excess of 20 amperes are charged N$2.04/kWh, thus getting 49 units.
The areas Cenored covers includes Otjiwarongo, Otavi and Grootfontein.
The numbers: Nored
Nored, which serves various towns across north and north-western Namibia including the local authority areas of Ondangwa, Ongwediva, Rundu and Katima Mulilo, charges N$2.24/kWh for 15 amperes and N$2.57/kWh for 30 amperes for prepaid electricity.
For residents limited to 15 amperes, N$100 buys them 44.6 units, while residents who receive 30 amperes and above get 38.9 units for their N$100.
The numbers: ErongoRed
At the coast, ErongoRed - which serves Walvis Bay, Swakopmund and Arandis - charges N$1.53/kWh for prepaid meters up to 20 amperes, or 65.3 units of electricity.
Meanwhile, it charges N$2.55/kWh for prepaid meters in excess of 20 amperes, giving consumers 39 units of electricity.
Pensioners residing within the local authorities ErongoRed serves are positively pampered, paying N$1.49/kWh and getting the most bang for their buck - 67 units of electricity for N$100.
In Gobabis, tariff schedules are outdated, having been last updated in 2019, while no tariff schedule is available for envisaged green hydrogen hub, Lüderitz.
Not cost-reflective
According to Cenored spokesperson Charlie Matengu, the tariffs are not cost-reflective to support operations, but assist the RED in serving its customers.
“Our prices are justified, but it is unfortunate that the tariffs that we are charging are not cost-reflective because we are charging below what we are supposed to be charging and that is because we understand the predicament that befalls our customers, especially the low-income earners and the pensioners.”
Cenored effected the lowest price increase of all the REDs, taking into account prevailing economic conditions in Namibia, Matengu said.
“If you look at our tariff increases, we are the lowest, and that already tells you that we justify our tariffs. We looked at the status quo, we looked at the situation on the ground, and we realised that the people are already feeling the pinch such as rent, food, fuel... Everything else is going up, and so we are charging a tariff that is not cost-reflective,” he said.
Spokesperson Simon Lukas said Nored had no part in setting tariffs, a responsibility he said rested with the ECB.
According to spokesperson Benjamin Lukas, ErongoRed subsidises up to 23% of its customers, and ensures they paying less than it pays to bulk utility operator, NamPower.
“Despite the increase, as company, we have looked at all possible ways to cushion the impact on our customers whilst ensuring that service delivery is not compromised,” he said.
‘Sound economic principles’
ECB manager for economic regulation Pinehas Mutota explained that setting tariffs was within the domain of the Electricity Act.
“The regulation of electricity tariffs is carried out in accordance with Section 27, subsection (2) of the Electricity Act 4 of 2007 that mandates the ECB to exercise regulatory control over electricity tariffs.”
According to him, the ECB relies on the use the cost-plus methodology to determine tariffs.
“The methodology considers both the regulated allowed revenue requirement, which encompasses the operational costs of the utility and a regulated return on assets,” he said.
Tariffs were set in such a way that it remained cost-reflective, Mutota added.
“Tariff reviews are conducted in accordance with the existing government policies, which mandate that tariffs should be cost-reflective, reflect the long-run marginal cost of supply and be grounded in sound economic principles.”
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