Source: Editorial Comment – Power tariff hike: Efficiency must come first | The Herald December 19, 2016
Finance and Economic Development Minister Patrick Chinamasa warned Zimbabweans during debate in Parliament over a $1 billion loan to renovate and extend Hwange Power Station that electricity tariffs would have to rise to service this loan and others taken out to keep the lights on in the country and allow industrial expansion.
We have always agreed that tariffs need to be reviewed and probably raised, since much of the present shortages here and in the region are because no one wanted to hike tariffs earlier to pay for new stations when they were first needed.
But there are a lot of caveats before any new tariff is agreed.
First, Zesa has to be far more forceful in making all customers pay their bills. It has done this for most household users; we are all on pre-paid meters and unless we pay, we sit in the dark.
But it is the householders who are keeping Zesa afloat.
Many industrial, mining and agricultural users simply do not pay, or pay very late. Zesa has plans to install smart meters for these users, with prepayment, but it needs to accelerate implementation of those plans.
We do not need the poor subsidising the rich.
Once industrialists know they have to pay we should start seeing them running their businesses far more efficiently.
Big users buy power, not energy.
This means they pay for the maximum load they impose during a month. So savings can be huge.
For example, a factory running its machines eight hours a day pays exactly the same bill as if it ran them for one hour a day, but on the longer runs it is spreading that cost over eight times as many things it makes, effectively paying just one eighth the price for electricity.
Zesa itself needs to think through the best options for adding capacity. Extending Hwange makes sense, since the extra staff would be very few and civil works would be just the extension rather than all the ancillary works.
So it is a lot cheaper to add extra boilers, generators and cooling capacity than to build a new power station the same size as the extensions.
Extending Kariba South can be a bargain under certain circumstances. There can be no extra energy, since there is no extra water, but Zesa could run the extended station flat out at peak demand and then cut output to very little at say 1am.
The extension will also be needed when Batoka is built. That dam will store little so when the Zambezi is in flood, Batoka needs to run flat out while Kariba ticks over and the lake fills, and then as flows fall Batoka’s output falls automatically and Kariba uses stored water to go flat out.
But the extension will also allow more options.
The capital cost of solar is plummeting. But solar does not work at night.
Yet if Zimbabwe has a big solar station or two, these could take the load during the day while the Kariba water ration was stored and then the hydro-station could take up the night as well as peak demand.
So when the Government and the energy regulator start looking at new tariffs, they need to ensure that all are paying, that the most cost effective options are selected for additions, and that Zesa is efficiently run. No one will willingly pay more to pad Zesa waste.
People will accept, if not happily, higher charges if they know everyone is paying their share and that the best-possible options have been implemented ensuring that the rise is the minimum possible.