Malawi Energy Regulatory Authority (MERA) announced last week afternoon a maximum increase of 50.8 percent for electricity tariff adjustment for the fourth based tariff for Electricity Supply Corporation of Malawi (ESCOM), covering a period from 2023-2027.
Addressing a press conference in the Capital, Lilongwe, MERA Chief Executive Officer, Henry Kachaje, said the increase will be split and segmented into four annual tranches, with the first tranche effective 1st September, 2023.
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He said this is the resolution of the MERA Board at its meeting held on 29th August, 2023.
According to Kachaje, there will be an 18 percent increase for 2023/2024, 16 for 2024/2025, 12 for 2025/2026 and 9 for 2026/2027.
He said in order to minimize the tariff burden on customers, MERA resolved that the above average tariff of K157.50/kWh be split and segmented into those tranches.
“Based on the total revenue requirement calculation for the tariff period at K1.720 trillion coupled with estimation for the energy that will be billed to end user customers at 9.928 billion units, the average end user tariff is K157.50/kWh.
“At the current average tariff of K104.46/kWh, this translates into an average tariff increase of 50.8%.
“The first tranche of 18% adjustment that will move the tariff from K104.46 to K123.26 per kWh will be implemented effective today 1st September, 2023,” said Kachaje.
The MERA CEO emphasized that these adjustments will only be allowed and given to ESCOM upon satisfying specific key performance indicators laid down and discussed with the utility body and other licensees in the energy sector.
“The Authority believes that granting this tariff adjustment, will enable the power sector to realize enough revenues for investments, system maintenance, operations, and other appropriate costs, thereby improve and sustain provision of services to customers,” he said.
Following receipt of base tariff application from ESCOM in April, 2023, pegged at 69.7 percent, MERA’s review of the application involved, among others, the following processes:
(1) One-on-one meetings with both ESCOM and Electricity Generation Company of Malawi Limited (EGENCO) in May and June 2023.
(2) Abridged version of the electricity base tariff application which was published in the print and electronic media for stakeholder and public comments over a two-week period from 15th to 29th June 2023.
(3) MERA conducted public hearings on the electricity base tariff application in Blantyre, Lilongwe and Mzuzu on 10th, 12th and 14th July 2023, respectively.
(4) From Mid-July, MERA embarked on a detailed analysis of the tariff application considering the inputs and outcomes from the review of the ESCOM Revenue Requirement Model, the tariff study and cost of service study, and comments and observations received on the application through various forms of media as well as issues and concerns that were raised by stakeholders during the public hearings.