Government is to start imposing financial penalties on electricity distributors for frequent and prolonged outages.
The regulator, the Electricity Regulatory Authority (ERA), in a notice, says come March 2019, it will start setting targets for reliability and quality of power supplied by distributors.
The notice is for the intended modification of Umeme’s contract for supply of electricity. ERA, on March 1, 2005, granted Umeme Licence No. 047 for distribution of electricity in Uganda.
The notice reads in part: “Frequent and long power outages/interruptions impose a cost on consumers in terms of the cost of energy not supplied.
The licensee will incur a financial penalty for failing to achieve the targets.”
The notice states that the licensee shall submit a report on its performance in respect of the minimum standards of reliability and quality of electricity supply for a twelve months period ending two months before the first day of the Tariff Year.
ERA notes that frequent and long power outages and interruptions impose a cost on consumers in terms of the cost of energy not supplied, adding that it is “in public interest to provide for a framework that will provide an incentive to the licensee to improve reliability of supply”.
According to ERA, introduction of the incentive-based framework is intended to, amongst other things, improve quality, efficiency, continuity and reliability of the electricity supply services; reduce power outages which cause consumers to resort to alternative and expensive sources of supply; and facilitate increased demand/consumption of electricity.
Other reasons are to increase productivity and minimize production losses for electricity consumers, and to reduce the tariff through increased power consumption as a result of reduced outages.
Frequent power outages are a pain to many consumers, particularly upcountry sites like northern Uganda and West Nile.
Umeme Communications Manager, Stephen Ilungole, says they have received the notification, which is now being studied by the company’s technical and legal team after which a response will be provided by the end of January.
He further noted that the notice is a statutory process, which does not lead automatically to imposition of penalties because, as he puts it, “Umeme is in the kitchen and knows firsthand the severity of the smoke when cooking.”
In its plans Umeme says it intends to spend $1.2 billion (approximately Shs4.4 trillion) in the next seven years to expand and upgrade the national network which serves 23 percent of the population.
Already the 183-megawatt Isimba Dam is scheduled to start operations by January 24, with the 600-megawatt Karuma Dam coming on line later.
It is not clear if the same notice of financial penalties will be extended to other off-grid power distributors.
They include Bundibugyo Enegry Cooperative Society, Kilembe Investment Limited, Kyegegwa Rural Electricity Cooperative Society, Kalangala Infrastructure Services, West Nile Rural Electrification Company, Kisiizi Hospital, and Uganda Electricity Distribution Company, amongst others.
By Daily Monitor