Electricity tariff setting
Petroleum and Energy Regulation No. 521/2022 No 5.5
Review national grid related tariff submitted to it by a license and submit its recommendations to council of ministers for approval and upon approval, regulate its implementations thereof, issue and regulate the implementation of directives for the determination of off-grid tariffs.
Tariff review is a systematic process involving the following steps:
- Demand forecasting for the bulk and retail markets informed by an understanding of the social, economic, and political environment and their impact on the key parameters driving demand
- Generation and transmission planning to meet the forecast demand: This involves long range planning of the mix of generating capacity in terms of technology, and preferred developer: whether Public or Private Sector. It also involves planning for the transmission and distribution network development in order to enable the conveyance of the power generated to the final consumer. The outcome of this process is the 20-year rolling Least Cost Power Development Plan.
- Determination of the sector revenue requirements based on forecasts of costs likely to be incurred for generation, transmission, distribution and supply of power.
- Determination of marginal costs of generation, transmission, distribution and retailing; based on approved pricing periods.
- Allocation of total revenue requirement among approved customer classes on the basis of the marginal costs and price sensitivity
- Computation of initial retail tariff proposals
- Sensitivity analysis of the proposed retail tariffs in order to fine-tune the proposed retail tariffs.
- Public exposure of the proposed tariffs, leading to public debate and hearing
- Determination of the final retail tariffs