Nthethe Maphaong and Puseletso Lephatsa
MASERU — Consumers must brace themselves for tough times ahead after the Lesotho Electricity and Water Authority (LEWA) approved an increase in power tariffs by between 13 and 15 percent.
The increase is with effect from June 1.
Among the hardest hit are domestic users of electricity after the Authority increased tariffs by a massive 15 percent.
Lewa chairperson, Professor Liako Moloi, told a press conference on Friday that the increase means “consumers will have to pay M10.30 to buy 10 units as compared to last year when they paid M9 to buy 10 units”.
The increase could however spell more gloom for consumers who are already grappling with the galloping cost of living.
The situation is dire for urban dwellers who rely on electricity for their energy needs.
Many households in urban areas are already living on meager incomes that are not enough to buy the basics and take them to the next pay day.
Moloi told the press conference that the new charges follow public consultation hearings that were held in Quthing, Leribe and Maseru last April.
She said the LEC had asked for a 36 percent increment in tariffs.
“After duly considering the application, the written public submission and oral presentations, reasons, facts and evidence were provided in the board to cover prudent operational costs due to increased businesses and inflation,” Moloi said.
“This means that electricity charges will cost M10.30 including tax to buy 10 units of electricity starting from June 1, 2013,” she said.
“The approved revenue requirement for LEC including levies, results in end-user tariffs increase of 13 percent for large customers, 14 percent for street lighting, 15 percent for both domestic and general purposes on energy, respectively and also 15.2 percent for maximum demand charge for large users,” she said.
Among those who were consulted were the Consumer Protection Association, Lesotho Textile Exporters Association, Letšeng Diamond Mine, Catholic Commission for Justice and Peace, the National University of Lesotho’s Department of Economics and domestic customers.
Moloi said LEC had requested to be allowed a revenue requirement of M714.7 million, but it was asked to modify its application by providing additional information and clarification in relation to compliance with the 2012/13 year’s tariff determination by the LEWA board, Lesotho Tariff Filing and Review Procedure and Electricity Connection Charges Guidelines.
Lewa reduced the LEC’s request to M572.4 million, which it said will cover the increased bulk supply of power purchase from ’Muela, Eskom and EDM for M285.3 million.
The LEC’s revenue requirement will also cover labour costs of M117 million that are in line with efficient level of staffing at the company.
“The Authority determined that increasing LEC staff costs by 31 percent as requested by LEC would be above the efficient level for the company and therefore adjusted labour costs by nine percent, in line with inflation and half growth in customer numbers,” Moloi said.
The LEC’s approved revenue requirement will also cover prudent operational costs due to increased business and inflation.
“The Authority adjusted LEC’s operational costs based on inflation, half the prediction growth in sales and the increased customer connections in order to incentivize the company to cut costs,” she said.
The approved revenue requirement is also meant to cover all depreciation expenses in order to ensure future replacements of obsolete assets as well as ensuring proper maintenance of the LEC’s supply infrastructures so as to maintain reliability and security of supply.
Moloi said it is also meant to provide an incentive for the LEC to explore alternative funding for its business.
“LEC has been allowed return on its investment equivalent to the one allowed last financial year in order to provide incentive to the Company to explore funding options to finance infrastructure projects aimed at increasing access coverage,” she said.