Zambia’s power utility company, ZESCO, has moved to clarify recent speculation regarding the adjustment of electricity tariffs, asserting that no decision has been made thus far. In a statement released to the public, ZESCO explained that any tariff adjustments are contingent upon the determination of the 2024 tariff by the Energy Regulation Board (ERB), expected to be finalized by May 2024.
While ZESCO was granted a Multi-Year tariff adjustment spanning from 2023 to 2027, the tariffs for the period of 2024 to 2027 were conditionally pre-approved by the ERB. This conditional approval hinges on the ERB’s annual True-Up review, which evaluates ZESCO’s performance against agreed-upon performance indicators and the effectiveness of the 2023 tariffs.
Key performance indicators assessed during the True-Up review encompass various aspects, including energy sales projections, revenue sales, cost of sales, operational and maintenance expenses, and capital expenditure.
ZESCO outlined three potential scenarios resulting from the ERB’s True-Up review. Firstly, maintaining the pre-approved tariffs could occur if ZESCO demonstrates optimal performance across all performance indicators. Alternatively, an increase in pre-approved tariffs might be necessary to offset uncontrollable costs incurred by the utility during the review period. Conversely, a reduction in pre-approved tariffs could be implemented if unplanned revenue gains are observed.
The statement reiterated that tariff adjustments by ZESCO are independently determined by the ERB in accordance with the Multi-Year Tariff Framework. This framework ensures a transparent and systematic approach to tariff adjustments, governed by regulatory oversight.
As stakeholders await the ERB’s decision, ZESCO emphasized its commitment to providing reliable and affordable electricity services to consumers across Zambia. The clarification aims to dispel any uncertainty surrounding tariff adjustments and reaffirm the adherence to regulatory processes in the determination of electricity tariffs.
ZESCO encouraged customers and stakeholders to remain vigilant for updates on the tariff determination process, underscoring the importance of transparency and regulatory compliance in maintaining trust and confidence in the electricity sector.
The utility company’s proactive communication serves to foster transparency and accountability, ensuring that stakeholders are informed and engaged throughout the regulatory process.