Southern, central RED consultations ongoing
The Electricity Control Board is engaged in consultations on the creation of a southern and central Regional Electricity Distributor, according to its chief executive officer, Foibe Namene.
In 2014 there was an Electricity Distribution Industry (EDI) conference that resolved to continue with such reforms and establish the remaining two REDs, according to her.
“Consultations are currently ongoing with regard to establishing these REDs,” Namene said.
According to economist Robin Sherbourne, the failure to launch a central and southern RED was because of fears by local authorities that it would reduce their revenue. The other fear was that higher electricity costs would be passed on to consumers.
Commenting on the points raised, Namene said: “All council stakeholders outside the REDs have a grave concern about the financial viability of their councils in the absence of regular and predictable fiscal support from government. It is a known fact that electricity has traditionally allowed many councils to cover other costs, thus subsidising other services. It is therefore understandable that there will be concerns that this source of funding will simply be removed without an adequate replacement.”
She added that the concern was misplaced because in 2005 the ECB developed a Local Authority (LA) surcharge.
“The purpose of the LA surcharge was to continue providing financial support to the local authorities and regional councils after the establishment of the REDs. The initial charge was based on the actual difference between revenue and costs as reflected in the ring-fenced electricity accounts. This has since been revised.”
Of the impact the establishment of a central RED would have, Namene said: “In terms of areas such as City of Windhoek, the ECB as the licensing authority with the mandate to regulate the supply, availability and affordability of electricity as per the Act and cabinet directive, has the mandate to direct any licensee how that market will be organised.
“The ECB is very optimistic with regard to the finalisation of the industry reforms and the remaining REDs, as studies have shown that this model is the preferred model going forward,” she said.
OGONE TLHAGE
In 2014 there was an Electricity Distribution Industry (EDI) conference that resolved to continue with such reforms and establish the remaining two REDs, according to her.
“Consultations are currently ongoing with regard to establishing these REDs,” Namene said.
According to economist Robin Sherbourne, the failure to launch a central and southern RED was because of fears by local authorities that it would reduce their revenue. The other fear was that higher electricity costs would be passed on to consumers.
Commenting on the points raised, Namene said: “All council stakeholders outside the REDs have a grave concern about the financial viability of their councils in the absence of regular and predictable fiscal support from government. It is a known fact that electricity has traditionally allowed many councils to cover other costs, thus subsidising other services. It is therefore understandable that there will be concerns that this source of funding will simply be removed without an adequate replacement.”
She added that the concern was misplaced because in 2005 the ECB developed a Local Authority (LA) surcharge.
“The purpose of the LA surcharge was to continue providing financial support to the local authorities and regional councils after the establishment of the REDs. The initial charge was based on the actual difference between revenue and costs as reflected in the ring-fenced electricity accounts. This has since been revised.”
Of the impact the establishment of a central RED would have, Namene said: “In terms of areas such as City of Windhoek, the ECB as the licensing authority with the mandate to regulate the supply, availability and affordability of electricity as per the Act and cabinet directive, has the mandate to direct any licensee how that market will be organised.
“The ECB is very optimistic with regard to the finalisation of the industry reforms and the remaining REDs, as studies have shown that this model is the preferred model going forward,” she said.
OGONE TLHAGE
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