New power tariff puts households, small manufacturers under pressure

KAMPALA. Households using more than 15 units of electricity a month and small manufacturers classified as commercial consumers face some of the highest electricity charges under the new power tariff that took effect this month.

The tariff structure creates wide differences in what consumers pay, with commercial users charged an average of Shs562.1 per unit, compared with Shs363.8 for medium industrial manufacturers and as low as Shs207.7 for extra-large manufacturers.

For households, the first 15 units consumed in a month are charged at the subsidised rate of Shs250 per unit. Consumption between 16 and 80 units attracts Shs779.4 per unit, while households using between 81 and 150 units pay Shs412 per unit. Consumption above 150 units is again charged at Shs779.4 per unit.

The new rates, approved by the Electricity Regulatory Authority (ERA), apply from October to December, according to the Uganda Electricity Distribution Company Limited (UEDCL).

The tariff bands mean families using refrigerators, televisions, irons, water heaters and electric cooking appliances could see significant differences in their monthly bills depending on how much electricity they consume.

For businesses, however, the cost of electricity goes beyond the monthly bill. Hotels and other enterprises say unreliable power supply has forced them to maintain generators and solar systems, creating an additional energy burden.

Uganda Hotel Owners Association (UHOA) chief executive officer Jean Byamugisha said hotels cannot afford prolonged power interruptions because electricity is essential to running rooms, kitchens, restaurants, conference facilities and other services.

“There should be consultations, there should be consensus, and there should be a value-for-money audit. We are still going through all these power shortages, and many of the hotels still have to use solar and generators,” Ms Byamugisha said yesterday.

She said hotels are effectively paying twice for energy — buying electricity from the national grid while maintaining alternative sources to keep operations running during outages.

The scale of consumption varies from one hotel to another depending on its size and services, she said, but reliability remains a common concern across the sector.

“And because of how unstable this power is, many of them are not just depending on UEDCL as our sole source of energy,” Ms Byamugisha said.

She said some hotels have installed solar systems and others maintain standby generators, but the cost of importing equipment has also risen amid foreign exchange pressures.

“Most hotels are importing a lot of this solar equipment. You have seen the price of fuel that is going up,” she said.

Ms Byamugisha said the recent movement of the shilling against major currencies could make alternative energy investments even more expensive.

“We just woke up to the hiking of the US dollar and the British pound for the first time in a very long time. The US dollar has crossed the Shs4,000 threshold in Uganda,” she said.

She warned that another increase in electricity costs could put pressure on businesses and employment.

“Another price increase on us is going to really make it untenable. And the challenge with that is that they don’t punish the business owner alone. They also punish the employees because if you cannot afford to pay your people, then you have to send them home,” she said.

Small manufacturers question classification

While large manufacturers benefit from lower industrial tariffs, small and medium-sized producers say some of them are still treated as commercial consumers despite using electricity primarily for production.

Mr Ronald Ssezibwa, the chief executive officer and chairman of SEB Group of Corporations, said his company is classified under Commercial Code 10.2.

SEB Engineering, which undertakes welding, steel fabrication, engineering and manufacturing, will therefore continue paying Shs666.5 per unit during peak hours, Shs562.1 during shoulder periods and Shs429.7 during off-peak hours.

“When we compared the new UEDCL fourth-quarter tariffs with SEB Engineering’s actual electricity bill, we found that our tariff has not changed,” Mr Ssezibwa said.

He said the company has invested in energy monitoring systems to control consumption, but argued that the commercial tariff remains burdensome for a manufacturing business.

“Electricity is not simply used for lighting offices; it powers our welding machines, cutting equipment, compressors and production activities,” he said.

Mr Ssezibwa said the difference between commercial and industrial tariffs raises questions about whether small and medium-sized manufacturers engaged in genuine production should continue to be classified as commercial consumers.

The fourth-quarter tariff schedule gives medium industrial manufacturers an average rate of Shs363.8 per unit, compared with Shs562.1 for commercial consumers.

“Uganda cannot promote local manufacturing while small manufacturers continue to carry electricity costs designed primarily for commercial consumers,” he said.

Larger manufacturers get lower rates

The tariff gap widens further for larger industrial users.

Large industrial manufacturing Block 1 consumers will pay an average of Shs308.1 per unit, while Block 2 consumers will pay Shs290.6.

Extra-large industrial manufacturers connected to the high-voltage network, with an average demand of at least 1,500kVA, will pay an average of Shs207.7 per unit.

For large consumers in the service sector, the average tariff is Shs357 per unit, with peak consumption costing Shs428.8 and off-peak power Shs286.5.

Extra-large service consumers with excess capacity declared by UEDCL will pay an average of Shs132.2 per unit, while those without excess capacity will pay Shs224.2.

Public hospitals and street lighting provided by municipalities, cities and towns will pay an average of Shs360 per unit.

UEDCL said postpaid customers will be billed under the new rates based on meter readings taken between October and December, while prepaid customers will pay the new rates when purchasing electricity during the same period.

Other charges, including fixed monthly charges, maximum demand charges, inspection fees, connection and reconnection charges, and penalties for electricity theft, will continue to apply.

The tariff schedule also retains the lifeline tariff for domestic consumers whose rolling average monthly consumption over the preceding six months does not exceed 100 units.