ZESCO EMMERGENCY ELECTRICITY TARIFF APPLICATION – FACTS BY DR. JOHNSTONE CHIKWANDA, ENERGY EXPERT

ZESCO EMMERGENCY ELECTRICITY TARIFF APPLICATION – FACTS BY DR. JOHNSTONE CHIKWANDA, ENERGY EXPERT

20.08. 2024

Zesco has applied to ERB seeking an emergency electricity price increase to meet the high cost of importing electricity.

ERB will hold a public hearing tomorrow at its Head Office to receive comments from stakeholders.

WHO IS NOT AFFECTED BY THIS APPLICATION?

730,000 Zesco customers who use less than 200 units of electricity per month are not affected.

This customer base is over 56% of the total number of customers which Zesco has.

This customer base is where the most vulnerable and a significant number of middle-class customers are found.

This is unprecedented in the history of this country that such a huge number of customers have been protected from electricity price increase should ERB approve the request from Zesco.

This is a clear demonstration that the policy on electricity adjustment is shifting the burden to those who use a lot of electricity. 

This pattern of shifting the burden is also clear in the 2023 and 2024 electricity adjustment.

WHO WILL BE AFFECTED MOST?

Customers who use more than 500 units per month will be affected the most.

This represents a narrow customer base. Should the request be approved, it means this category will start spending more than K3,500 on electricity units per month. Given that the price of a standard solar panel is about K3,000, my strong advice to those who consumer more than 500 units per month is that they will be better off buying solar panels.

In any case, most of the customers in this category already have invested in batteries and inverters.

The only remaining step is to buy solar panels. 

WHO ELSE WILL BE AFFECTED?

The electricity price for those who use between 200 units and 300 units will increase by 53 ngwee per unit.

Those who use between 300 units and 400 units, the price will increase by 85 ngwee per unit and those who use 400 units and 500 units the price will increase by K1.27 ngwee per unit. 

This shows that different customers will be affected differently with the burden shifting to those who use a lot of electricity.

In the 4 categories, the proposed increase is 50%, 50%, 75% and 156% respectively with 156% being for those who use more than 500 units.

The average percentage increase is 82.75% across the 4 customer categories.

IS THIS THE HIGHEST PERCENTAGE INCREASE IN THE HISTORY OF ZAMBIA?

In 2019 the electricity price was increased by an average of 113% across different customers while the current request from Zesco for emergency approval is an average of 82.75%. In 2019, there was no emergency compared to the current situation.

HOW LONG WILL THE EMERGENCY PRICES LAST IF ERB APPROVES THE REQUEST?

According to the Electricity Act, a review of the circumstances may2 be taken after 3 months. Should the emergence situation fall off, it is possible to come back to the initial electricity prices.

WHAT CAN HAPPEN IF ERB REFUSES TO APPROVE THE REQUEST?

Zesco has little electricity remaining meaning that most of the electricity we are consuming is coming from independent power producers and from outside the country at a price more than double than what Zesco is currently mostly currently selling. If the request is not approved, the impact of not importing electricity will be worse than the impact of approving the request. it is a lesser pain to allow approve the request.