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SERA APPROVES 9.5% SEC TARIFF HIKE

01/02/2014 04:40:00 BY SISHO MAGAGULA

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MBABANE – The price of electricity is set to shoot up - yet again. This follows a decision by the Swaziland Energy Regulatory Authority (SERA) to award a 9.5 per cent tariff hike to the Swaziland Electricity Company (SEC). The increase will be effected on April 1, 2014.

In October last year, SEC submitted an application for the tariff increase to SERA in terms of section 32 of the Electricity Act of 2007 as read with the Tariff Methodology Regulations of 2012. The application sought for a tariff hike of 15.5 per cent for the financial year 2014/15.
The much-awaited announcement was made by SERA Chief Executive Officer (CEO), Vusie Mkhumane in a media briefing held at the authority’s offices yesterday afternoon.
Mkhumane first explained SEC’s motivation for the increase and further details of the approval process.

He said in making the application for the tariff increase, SEC advanced several reasons such as ESKOM’s proposed tariff increase of 10.25 per cent. SEC also contended that over the last 12 months, there had been little rain to enable SEC to generate more electricity locally, and that this trend was expected to remain the same for the next ensuing year (2014/15).
Another argument was that over the last three years, SEC had been awarded insufficient tariff increases to sustain the company. The company also said it had not been able recover all its costs through the tariff awarded in the financial year 2012/13.

The under-recovery is said to have amounted to E71.52 million which SEC requested that it be allowed to recoup from consumers.
Mkhumane said after receiving SEC’s application, SERA conducted public hearings to canvass opinions of the public and other interested stakeholders.
“Public hearings were conducted in eight places; Pigg’s Peak, Mbabane, Malkerns, Manzini, Lomahasha, Hluti, Nhlangano and Siphofaneni. FSE requested a special session for them and this was held in Matsapha on December 10, 2013. There was also a special session for the minister and Cabinet on the 15th and 16th respectively,” he said.

Explaining the approval process, Mkhumane said SERA had a meeting with the Minister of Natural Resources and Energy and the ministry’s principal secretary.
“A report on the public hearings has been compiled and will be made available on request and through the SERA website. SERA has considered the public input and also applied the approved tariff methodology to do its own independent review of the SEC application. A presentation has also been made to cabinet and to the Board Technical Committee.
“The board approved the tariff on January 28 2014 and SERA communicated its determination to SEC,” he said.

Some senior managers from SEC were present when the announcement was made yesterday. These include Acting General Manager – Finance, Ransford Quaynon, General Manager Corporate Service Max Mkhonta and Sifiso Dhlamini, the Corporate Communications Manager. They all seemingly held their breath as Mkhumane announced the decision.
“An average tariff increase of 9.5 per cent is approved for SEC for the 2014/15 financial year with effect from April 1, 2014. Fixed charges (i.e fixed, demand and access charge) on all customer tariff categories with the exception of domestic and life line tariff are increased by inflation rate of 6.8 per cent,” he said.

He said SEC had been directed to furnish SERA with the proposed tariff structure for the 2014/15 financial year, together with the sales revenue to be recovered from the proposed new tariffs,” said Mkhumane.
Adding he said SERA would also follow up on the other outstanding operational matters, that is, the lack of RAB register, ring-fencing, connection charges, quality of supply and service.
He explained that the tariff would be effected in April based on the strength of the enabling legislation which provides that consumers shall be given 90 days notice.