CONSUMERS should brace themselves for an increase in electricity charges following the Lesotho Electricity Company’s (LEC) proposal for a 25.4 percent tariff hike for the 2016/17 financial year.
LEC’s regulator, Lesotho Electricity and Water Authority (LEWA), made the announcement this week while also inviting stakeholders to a public hearing on the proposed increase, scheduled for 8 April 2016 at Victoria Hotel in Maseru.
During the same hearing, LEWA will also solicit views from the public over the Water and Sewerage Company’s (WASCO) proposal to increase urban water and sewerage service tariffs by 13 percent.
Among the reasons LEC cites for the proposed increase are the increasing costs of importing electricity and higher operating expenditures.
“LEC is requesting an approval for a revenue requirement of M819.5 million for the financial year 2016/17. The company is requesting a tariff increase of 25.4 percent on both energy and Maximum Demand (MD) charges,” reads part of LEWA’s statement dated 1 March 2016.
“Amongst the various drivers for the application that LEC has mentioned are electricity bulk purchases and operating expenditure for transmission and distribution businesses.
“As an example, LEC states that electricity bulk purchases from South African power utility Eskom were expected to increase by eight percent in the coming years.
“In addition, the company maintains that operating expenses have increased as a result of growth in the demand for electricity, and the need for replacement of ageing network assets, enhanced reliability and compliance to performance standards.”
During the 2015/16 financial year, LEC requested an 18.32 percent increase for all its different customer categories. However, LEWA only allowed the charges to be increased by a maximum of seven percent.
LEWA Chief Executive Officer Ntoi Rapapa told the Lesotho Times yesterday that while LEC had been delivering reliable power supply in preceding years, it was dogged by operational challenges.
“In recent years, there have been few power cuts from LEC which is a positive development in their service delivery,” Mr Rapapa said.
“However, they face a lot of challenges such as slow rates of new electricity connections and high operating costs.
“Importing electricity from outside the country puts LEC in a difficult situation as their prices are subject to external adjustments in countries where they source the power.”
Mr Rapapa said in recent years, LEWA had approved tariff hikes at lower rates than those proposed by LEC, adding that their decisions were also influenced by improvements in the electricity provider’s service delivery.