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United States : ERB authorises 25.6% Zesco tariff increase.

THE Energy Regulation Board (ERB) has authorised Zesco Limited to hike electricity tariffs by 25.6 per cent despite the deterioration in its quality of service and high expenditure on staff emoluments, accounting for 51 per cent of its total costs.

Residential consumers will be the hardest-hit by the electricity tariff increases, with domestic power tariffs expected to rise by 41 per cent, followed by small power consumers at 14 per cent and large power consumers at 12 per cent.

Power utility Zesco had proposed to raise electricity tariffs by an average 36 per cent for 2010 and an average tariff adjustment of 21 per cent for 2011, 14 per cent for 2012, eight per cent for 2013 and nine per cent for 2014.

Announcing the approved tariff increases for 2010/2011, ERB chairman Sikota Wina yesterday said increasing electricity costs for Zesco was not the only solution to the challenges of Zesco s operations.

The utility needs to re-engineer its internal business processes and transform itself into a fully-fledged commercial entity, Wina said. The Energy Regulations Board (ERB) s findings are that Zesco s quality of service has generally deteriorated as indicated by the utility s 2009 Key Performance Indicators.

Wina admitted that Zesco had failed to meet the Key Performance Indicators (KPIs). That Zesco has not yet shifted its staff to regular residential tariffs, contrary to the board s directive and that the power rehabilitation project has experienced delays in completion and the utility is facing post rehabilitation challenges on projects, he said.

Wina said Zesco had been allowed to hike the tariffs outside the KPIs as the power utility would not have met the indicators to warrant a hike.

The utility s performance against the agreed KPIs has been unsatisfactory, said Wina. Restricting revenue requirements to KPI scores would have resulted in the utility getting lower revenues than the appropriate revenue requirements. The utility was therefore given a grace period of up to March 2011. During the intervening period, the ERB has continued to monitor Zesco s performance in relation to KPIs Zesco staff costs in relation to its total operating cost are still high at 51 per cent of total costs. The international standard is 31 per cent.

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Date:Jul 27, 2010
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