ERA reduces electricity tariff
I read with amusement how ERA claims to have reduced Electricity tariff in the Newspaper of January 15, 2014. At first, I was very happy that electricity tariffs in Uganda were actually coming down. However on studying their report I realized how misleading it is.
ERA increased the lifeline tariff from UGX100 per unit to UGX:150 per unit. This is an increase of 50%. The lifeline tariff is the tariff that is applied for the first 15 units of consumption. The reason it is called lifeline it is to support those users who use electricity for limited services like lighting. The motivation is to encourage these users to use electricity which is a cleaner source of energy. Most customers who consume few units per month are also low income earners.
First, by increasing the lifeline by 50% means that the poorer consumers of electricity are going to fill a bigger impact on their electricity expenditure. It means that electricity will take a bigger share of their wallet.
Second, all domestic consumers are affected by the 50% increase in lifeline tariff. ERA must have done the numbers and realized that electricity revenues will increase by increasing the lifeline tariff. The domestic tariff beyond lifeline was reduced from UGX:524.5 to UGX:520.4 per kwh. This is not even a 1 percent reduction.
I find this bizarre how ERA has played on our cycle.