Mera allows Escom to raise electricity tariff
The Malawi Energy Regulatory Authority has allowed the Electricity Supply Corporation of Malawi to increase its electricity base with 50.8 percent over the next four years from K104.46 per kilowatt per hour to an average tariff of K157.50 per kWh by 2027.. The percentage would be split in the next four years, but it will effective September 1 2023 where an 18…
The Malawi Energy Regulatory Authority (Mera) has allowed the Electricity Supply Corporation of Malawi (Escom) to increase its electricity base with 50.8 percent over the next four years from K104.46 per kilowatt per hour (kWh) to an average tariff of K157.50 per kWh by 2027.
The percentage would be split in the next four years, but it will effective September 1 2023 where an 18 percentage has been effected. This moves the tariff to K123.26 kWh from K104.46.
Mera Chief Executive Officer Henry Kachaje told journalists in Lilongwe yesterday that Mera Board met on August 29, 2023 when it settled for a 50.8 percent increase instead of 69.7 percent that Escom wanted.
He said Mera has made the decision to enable Escom raise the revenue it requires for other operations.
“The authority believes that granting this tariff adjustment will enable the power sector to realise enough revenue for investment system maintenance operations and other appropriate costs, thereby improve and sustain provision of services to customers,” Kachaje said.
In the 2024-2025 year, the tariff base would be increased by a 16 percent, 12 percent in 2025-2026 and then nine percent in the 2026-2027 year.
He said in total, over the four-year period of 2023- 2027 base tariff period, Escom will require K1.720 trillion to accomplish its planned activities.
“If the whole 50.8 percent increase were to be implemented at once, tariffs would immediately move from K104.46/kWh to K157.50/kWh. However, since the tariff adjustment will be split over the four years, the annual tranches add up to 55 percent which is higher than the 50.8 percent.
“The reason for this difference is that when implementing annual tranches, especially from second year onwards, the adjustment is made on an already increased tariff implemented in the previous year,” Kachaje said.
He, however, said there are implementation arrangements required to be “fully fulfilled” by Escom. Some of them are that it opens and operationalise the bank customer transactions and realisation account within the first three months.
In August 2022 the defunct Power Market Limited (PML) and Escom applied to Mera for a 99.9 percent of tariffs base increase between 2022 to 2026.
The proposal attracted a public outcry including from the Consumers Association of Malawi which protested the hike plea.
The application covered generation, single buyer, system market operator, transmission, and distribution activities.
Following government’s decision to dissolve PML, Escom submitted another application for the 69.7 percent increase.