Why have electricity prices increased so much since Erongo RED started?
The steep increases in electricity prices of NamPower and the commencement of Erongo RED all started in 2005 and it can therefore be understood if customers blame the establishment of the REDs for the high increase in tariffs. The ECB would like to emphasize that the current electricity price increases is not due to the creation of Erongo RED. These increases have been driven by unfavourable bilateral agreements with Eskom, overall regional shortage of electricity supply, expensive own generation of Paratus and Van Eck Power stations, Cabinet decision to accelerate NamPower’s cost reflectivity by 2010/2011, and higher cost of new generation and transmission projects. The above means that even if the electricity distribution and supply were done by local authorities, the average increases could not have been avoided and, in all probability, would have been higher since a local authority does not have the economies of scale as that of a RED.
Related Questions
- There is a perception amongst consumers that the salaries of Erongo RED staff are too high resulting in electricity prices to increase. Can Erongo RED please respond?
- Why is NamPower a shareholder in Erongo RED while it sells electricity to Erongo RED making a separate ompany profit of N$120 million?
- Why have business electricity prices increased?
