ELECTRICITY REGULATORY AUTHORITY

ELECTRICITY REGULATORY AUTHORITY
Plot 15 Shimoni Road, Nakasero
P.O. Box 10332, Kampala
Tel: 041-4341852/646,
Fax 041-4341624,
info@era.or.ug
www.era.or.ug
Press Statement for Quarter 4, 2014
ERA House, Kampala – October 21, 2014 at 10:00am
Ladies and Gentlemen, Electricity Regulatory Authority is pleased to share
with you the developments that have taken place in the electricity industry
since the beginning of 2014 up until September 2014, and to give you an
insight of the future outlook.
1. Electricity Demand and Supply
Currently, Uganda is enjoying more stable electricity supply which is
provided from large and mini hydropower resources as well as cogeneration plants. There has been no load shedding since the year
started. The existing supply from renewable energy sources is sufficient
to meet the current demand.
The maximum peak demand has been relatively stable between January
2014 and August 2014, at a monthly average of 491MW. The average
shoulder demand was 434MW while the off peak demand was 346MW.
We presently have reserve capacity of 100MW from two heavy fuel oilbased plants, one in Tororo and the other in Namanve. These plants have
been minimally dispatched since the beginning of 2014 in fulfilment of
contractual obligations.
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2. Plans to Expand Generation Capacity
With the growing demand for electricity, estimated between 10-12% per
annum in the short to medium term, Electricity Regulatory Authority
(ERA) will continue to focus the regulatory thrust on expansion of
generation capacity, with corresponding investment in transmission and
distribution infrastructure. A number of programmes and projects are
currently being implemented to ensure adequate supply capacity. These
include:a) Small Renewable Energy Projects
ERA, working with other Government Agencies and Development
Partners, established the Global Energy Transfer for Feed–in–Tariffs
(GET-FiT), an initiative to accelerate renewable energy development
including hydropower, solar, wind and biomass technologies. This
initiative provides a top-up premium in the range of 0.5-2.0 US cents
per kilowatt hour on the Renewable Energy Feed-in-Tariff (REFIT). It
also avails a guarantee scheme to enhance the bankability of the
projects.
The GET-FiT Programme has advanced and two evaluation rounds
have been conducted, one in 2013 and the second in March 2014. A
total capacity of 108.5MW was approved during the first and second
rounds of bidding as shown in Table 1. The approved projects to date
represent a commitment of EUR 70million in GET-FiT premiums.
Construction of these projects will commence before the end of 2014
and will be brought into production within the next two to three
years.
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Table 1: Approved GET-FiT Projects
Project Name
Nyamwamba
Rwimi
Kikagati
Kakira
Siti 1
Siti 2
Waki
Nengo Bridge
PH Industrial Farms
Lubilia Kawembe Hydro
Muvumbe Hydro Uganda Limited
Sugar and Allied Industries
Total
Installed Capacity (MW)
9.2
5.5
16.0
20.0
5.0
16.5
4.8
6.7
1.0
5.4
6.5
11.9
108.5
With additional funding from the European Union, the programme
has expanded to solar photovoltaic (pv), targeting to bring on stream
up to 50MW. The bidding process for the first 20MW is in advanced
stages. The GET-FiT initiative is aimed at bridging the generation gap
likely to occur between 2015 and 2018 before commissioning of the
next large hydropower plants.
In order to accelerate the licensing process and facilitate faster
conclusion of negotiations with the Transmission Company and
Government of Uganda, ERA developed standardized Power Purchase
Agreements, Implementation Agreements and model Licenses for
small hydropower and bagasse co-generation technologies.
b) Large Hydropower Development
Government of Uganda (GOU) is committed to undertake large
hydropower development under Public Private Partnership financing
arrangement. The construction of the 600MW Karuma hydropower
plant is underway; with expected completion in 2018/19.
Construction of the 183MW Isimba hydropower project also
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commenced in 2014; the project is expected to be commissioned in
2016/17. Government will continue to develop other large
hydropower projects such as Ayago and Oriang along the River Nile,
as well as small non-Nile hydropower projects such as Muzizi and
Nyagak III.
3. Licensing of Electricity Projects
3.1.
Licenses and Permit Issued
Licensing constitutes one of the major output areas for ERA. Various
license and permit applications for generation, transmission, distribution
and sale of electricity were received, reviewed and issued during the
period January – September 2014.
The Authority issued nine (09) Licenses for construction of renewable
energy projects with a total installed capacity of 132.7MW, namely:i)
5MW Siti 1 hydropower plant;
ii)
16.5MW Siti 2 hydropower plant;
iii)
5.54MW Rwimi hydropower plant;
iv)
5.0MW Kakaka hydropower plant;
v)
5.4MW Lubilia hydropower plant;
vi)
1.0MW biomass gasification plant;
vii) 4.8MW Waki hydropower plant;
viii) 6.5MW Muvumbe hydropower plant; and,
ix)
83MW Achwa hydropower plant.
Two (02) License Exemptions were issued to Bwindi Community Micro
Hydro Project Limited and Pamoja Energy Limited for establishment of
64kW hydropower and 43kW biomass projects in Bwindi and Muduma
respectively. The Authority issued fifteen (15) Permits to enable
Companies to undertake detailed feasibility studies for various projects,
details of which are presented in Table 2.
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Table 2
Feasibility Study Permits issued from January –
September 2014
SN Project Name
Location
1
Kabarole
9
Nsongya
hydropower
project
Tororo solar project
Bukwa
hydropower
project
Nyamagasani
2
hydropower project
Lower
Nkusi
hydropower project
Atari
hydropower
project
Bagasse cogeneration
project
Kanyampara
hydropower project
Natural gas project
10
2
3
Installed
Capacity, MW
9.2
Developer
Savimaxx Limited
Tororo
Bukwo
10
9
CIRE Uganda Limited
C&G Andijes Limited
Kasese
8
Kibaale
11
Nyamaghasani 2 Hydropower
Plant Limited
Schima Group Limited
Kapchorwa
8
Mayuge
21
Kasese
1.6
Hoima
50
Nyakabale
Rukungiri
0.4
11
Nyahuka
Bundibugyo
0.5
12
Hoima
Hoima
13
Nchwera
Mitooma
0.5
14
Nsongya
Kabarole
0.5
15
Warugo
Bushenyi
0.73
4
5
6
7
8
1.958
Ngoryomwo
Small
Hydro
Limited
Mayuge
Sugar
Industries
Limited
Marma
Technical
Services
Limited and Kol Services Limited
Lake
Albert
Infrastructure
Services
Uganda
Energy
Credit
Capitalization Company Limited
Uganda
Energy
Credit
Capitalization Company Limited
Uganda
Energy
Credit
Capitalization Company Limited
Uganda
Energy
Credit
Capitalization Company Limited
Uganda
Energy
Credit
Capitalization Company Limited
Uganda
Energy
Credit
Capitalization Company Limited
If the detailed studies confirm technical, financial and economic viability
of these projects, an extra 132MW capacity will be added onto the
existing generation.
The Authority discourages speculative behaviour in this sector among
applicants for Licenses and Permits. Such behaviour impedes the
development of the electricity sector despite the favorable policy
framework in place and an attractive tariff regime.
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3.2.
Installation Permits Issued
Under provisions of Section 88 of the Electricity Act 1999 and Regulation
5 of the Electricity (Installation Permits) Regulations Statutory Instrument
No 19 of 2003, the Authority licenses persons and companies qualified to
install electrical wiring or extensions to existing wiring on premises within
Uganda. In fulfilment of this mandate, the Authority issues Installation
Permits and monitors the performance of ERA-certified wiremen and
contractors.
ERA received a total of 300 new applications for Installation Permits for
the period January - September 2014, out of which 249 qualified and
were issued Permits.
The Authority periodically publishes a list of certified wiremen who are
authorized to carry out electrical installation works. The same list is
available on our website www.era.or.ug. We call upon the public to
always engage ERA-certified wiremen to wire their premises.
We would like to inform the public that in an effort to create awareness
of this legal requirement and knowledge of certified wiremen, the
Authority undertakes regional sensitization drives throughout the
Country on a regular basis. Activities undertaken include radio talk shows
and free training for Technicians. The activity plan for the Installation
Permits Committee is readily available on our website www.era.or.ug.
4. Energy Efficiency and Demand Side Management
The Authority recognizes that consumer demand for energy can be
managed to improve distribution efficiency hence the need for Demand
Side Management (DSM) efforts. To this effect, we are collaborating with
other institutions (MEMD, Utilities, etc) to strengthen regulatory
initiatives to support Energy Efficiency practices and Demand Side
Management (DSM). We developed a Demand Side Management Plan
with the aim of increasing focus on energy efficiency initiatives and
development and implementation of demand side management
measures. These are important in management of the peak demand to
defer the need for additional generation capacity.
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To that effect, the Authority has allocated US $ 4.1million towards this
initiative which, among others, includes procurement and distribution of
light emitting diodes (LEDs) to replace the high energy consuming
incandescent bulbs that are currently in use by domestic consumers. The
initial batch of 420,000 LEDs will be distributed to consumers starting
January 2015.
The Authority has also adjusted the peak weighting used in tariff
calculation to encourage consumers to shift consumption from peak time
periods (evenings) to off-peak and shoulder time periods (day time and
late night).
We are also sensitizing consumers about efficient energy use through,
among others, dissemination of information booklets titled ‘How To
Reduce Your Electricity Bill’.
Going forward, ERA will continue coordinating with distribution utilities
and other stakeholders to implement comprehensive demand side
management and energy efficiency measures. The benefits that will
accrue from implementation of these measures include: Energy cost savings to the domestic consumer;
 Energy costs and demand cost savings to the industrial consumer;
and,
 Less constraint on the utility network.
These initiatives will go a long way in addressing the electricity supplydemand gap that is apparent in the short to medium term.
5. Compliance Monitoring and Enforcement
The ERA is mandated to enforce compliance of Licensees with obligations
in their Licenses, the Electricity Act and Regulations thereto. During the
period January – September 2014, the Authority carried out statutory
inspections of operations of ten Licensees. Generation companies
inspected include Kinyara, Mpanga, Nyagak 1, Bujagali, Sugar
Corporation of Uganda Limited, Kakira Sugar Limited and Electromaxx
Uganda Limited. Distribution companies inspected include Umeme
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Limited, West Nile Rural Electrification Company (WENRECo) Limited and
Uganda Electricity Distribution Company Limited.
Most of the entities inspected were found to be largely compliant, except
for a few areas where the Companies committed to undertake corrective
measures within a specified period of time.
During this period, ERA conducted a compliance workshop for Licensees
where various stakeholders were brought on board to share their
experiences as well as agree on addressing the challenges in the
electricity sector.
6. Electricity Prices and Financial Performance of the Sector
The Authority approved and gazetted the Quarterly Tariff Review
Methodology which was implemented effective January 2014. The
Quarterly Tariff Review methodology provides for adjustment of the
electricity tariffs for changes in the following:a) Inflation rate leading to Inflation Rate Adjustment Factor (IRAF);
b) Exchange rate leading to Exchange Rate Adjustment Factor (FERFAF);
and,
c) Fuel prices on the World Market leading to Fuel Price Adjustment
Factor (FPAF).
The approved quarterly tariff review methodology provides for a capping
mechanism where the retail tariff is not expected to increase by more
than 2.5 percent per quarter as a result of implementation of the
adjustment factors.
In accordance with this methodology, the Authority has been releasing
tariffs applicable for each quarter. The approved new end-user tariffs for
the fourth quarter (October – December 2014) are shown in Table 3:-
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Table 3: Quarter 4 2014 Adjustment Factors and Total Retail Tariff
End-User Retail Electricity Tariffs (Shs/kWh)
2014 Base Tariff
Domestic
Commercial
Medium
Industrial
520.6
474.4
452.0
Large
Industrial
Streetlights
Weighted
Adjustment
Factor
310.4
488.8
411.1
Tariff Adjustment Factors (Shs/kWh)
Inflation Adjustment
Factor(IRAF)
Exchange Rate Adjustment
Factor (FERFAF)
Fuel Adjustment Factor
(FPAF)
Total Adjustment Factor
0.9
0.9
0.9
0.9
0.9
0.9
9.1
9.1
9.1
9.1
9.1
9.1
(11.9)
(11.9)
(11.9)
(11.9)
(11.9)
(11.9)
(1.9)
(1.9)
(1.9)
(1.9)
(1.9)
(1.9)
Resultant Retail Tariff
518.7
472.5
450.1
308.5
486.9
409.2
Percentage Change
-0.36%
-0.39%
-0.41%
-0.60%
-0.38%
-0.45%
The Authority also considered various tariff applications and approved
new end-user tariffs for Kilembe Investments Limited, Ferdsult
Engineering Services Limited, Bundibugyo Energy Co-operative Society
Limited, West Nile Rural Electrification Company Limited, Pader-Abim
Community Multipurpose Electric Cooperative Society and Kyegegwa
Rural Electricity Cooperative Society. The approved tariff schedules for
these companies are readily available on our website www.era.or.ug.
7. Improving the Efficiency of the Electricity Industry
There is continuous effort towards increasing efficiency of electricity
generation, transmission and distribution.
On the generation side, the Authority developed and continues to
maintain a dynamic least cost generation planning framework with the
objective of ensuring that cheaper sources of generation are exploited
first.
On the transmission side, the Authority has adopted the Multi-Year Tariff
regime for Uganda Electricity Transmission Company Limited in order to
create incentives for improving efficiency. The loss targets set for the
company are shown in Table 4:-
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Table 4: Transmission Loss Targets
2014
Power loss (%)
4.7
Energy loss (%)
3.8
2015
4.4
3.6
2016
4.0
3.3
Uganda Electricity Transmission Company Limited recently completed
the refurbishment of the Mutundwe–Kabulasoke western axis line, which
is expected to improve supply reliability to the Western part of the
country. Other transmission projects under construction include the
Mbarara-Nkenda 132Kv line, Tororo-Opuyo-Lira 132kV line and KawandaMasaka 220kV line. Two regional interconnection projects are also under
construction, namely, the Uganda-Kenya and Uganda-Rwanda 220kV
line.
On the distribution side, Umeme Limited has continued to roll out prepayment with 41,495 customers connected between January and June
2014, bringing the total number of customers connected on the prepayment system to 94,229. The Authority is finalizing guidelines to
govern pre-payment metering for all licensed distribution utilities. These
guidelines will be completed and published before the end of this year.
Umeme Limited has continued to register good progress in as far as
reducing distribution losses is concerned. For the period January to June
2014, the Company reported distribution losses of 21.3% compared to
the loss level of 23.4% as at December 2013. Distribution collection rates
were reported at an average of 96% for the period January to June 2014,
compared to an annual average of 95.8% in 2013. The Authority will
continue to monitor the performance of this Company in line with the
seven- year performance targets that were set in 2012.
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8. Handling of Consumer Complaints
The Electricity Regulatory Authority, in October 2012, set up a Consumer
Affairs Unit with a duty to handle consumer related issues and
complaints. The Consumer Affairs Unit is responsible for all electricity
consumer complaints received at ERA, and ensures that all complaints
are handled by Licensees within the existing regulations.
The public is encouraged to call our dedicated complaints telephone line
+256 757 341647 to register electricity supply-related complaints. The
Authority is also in advanced stages of establishing a Contact Centre to
enable us serve the public better.
As an overseer of the electricity sector, we shall continue to focus on
provision of safe, efficient, reliable and sustainable electricity supply.
I thank you all for coming; we can now take some questions.
___________________
Benon M. Mutambi, PhD
Chief Executive Officer
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