In December 2021, the power regulator, the Electricity Regulatory Authority (ERA) introduced the Cooking Tariff also known as the Declining Block Tariff for domestic users, applicable to the electricity customers served by Umeme Limited.
The tariff became effective January 2022.
ERA says the introduction of cooking tariff is to discourage the use of firewood and charcoal.
The ERA CEO, Eng. Ziria Tibalwa Waako explains that the cooking tariff charges the power units used for cooking at Shs. 412.0 as opposed to the regular Shs747.5 per unit. The reduced Shs412.0 charge covers from 81 to 150 units.
“Under this Tariff mechanism that became effective on 1st January 2022, ERA reduced the Tariff for a 70 Units Electricity bundle to Ush. 412 per unit to enable Domestic Customers utilize more electricity especially for cooking,” Eng Waako explains.
This targets to provide domestic customers with access to clean energy for cooking, a key aspiration of the country enshrined in the Third National Development Plan (NDP III).
ERA believes that households averagely use 80 units on lighting, watching TV and other electrical appliances excluding cooking. They are now being encouraged to use more units for cooking starting from 81 to 150. It is projected that the new tariff is better than spending Shs60,000 to Shs80,000 on charcoal in a month for cooking.
The changes in the Tariff Structure were also in line with the Sustainable Development Goal (SDG) Number 7 that calls for “affordable, reliable, sustainable and modern energy for all by 2030” aimed at promoting accelerated access to clean energy for improved welfare of society for social-economic transformation.
With respect to the Cooking Tariff, the Minister of Energy and Mineral Development, Ruth Nankabirwa said that it was a deliberate strategy by the Government of Uganda to displace charcoal and other biomass sources of cooking fuel by making the cost of electric cooking lower than the cost of cooking using charcoal in homes, and that it was associated with health benefits for communities, cost savings, and the convenience of clean cooking.
The ERA Board Chairperson, Sarah Wasagali Kannabi said the reviewed Tariff Structure was aimed at catering for the current and future needs of the country’s Electricity Supply Industry in an effort to reduce the cost of Electricity.
The Authority, she said, will do everything possible to ensure reliable electricity supply to support Ugandans to enjoy cooking using Electricity under the new Cooking Tariff; and also to support Industrialists to produce more commodities for sale on both the Ugandan and Regional markets at competitive prices.
ABOUT THE REVIEWED ELECTRICITY TARIFF STRUCTURE
a) Declining Block Tariff For Domestic Consumers (Cooking Tariff)
The Cooking Tariff is a strategy by the Government of Uganda to displace charcoal and other biomass sources of cooking fuel by making the cost of electric cooking lower than cooking using charcoal in homes. It is being introduced under a Declining Block Tariff Structure, which allows for differentiated Tariff levels based on the amount of energy consumed, whereby the units of Electricity consumed by a Domestic Customer beyond a set monthly threshold announced by the Authority are charged at a Lower Tariff. With the Cooking Tariff, consumers pay UGX. 412 for each Unit of Electricity in the threshold approved by ERA (81 to 150th Units).
b) Lifeline Tariff
A Lifeline Tariff is a price for a minimal package of Units of Electricity, helping low-income earners access affordable Electricity. It aims to facilitate the Electricity consumers in the low socio-economic customer class category to afford the Electricity units deemed necessary for basic domestic use.
Under the review of the qualification criteria, customers who consume less than 100 Units of Electricity in a month qualify for the Lifeline Tariff of UGX 250 for each of the First 15 Units consumed in a month.
Customers who consume more than 100 Units of Electricity in a month do not qualify for the Lifeline Tariff but rather pay UGX 747.5 for each of the First 80 Units of Electricity; and thereafter enter into the Cooking Tariff (Declining block) of UGX 412 per Unit upto the 150th unit of Electricity consumed.
c) The Pilot Tariff For Industrial Parks
In a bid to improve the competitiveness of Uganda’s Manufacturing Sector, the Government, effective January 2022 piloted the Supply of Electricity to Industrial Parks at Five (5.0) United States Cents per kilo Watt-hour.
The piloting project commenced at two Industrial Parks, namely: Lao Shen in Kapeka and MMP Industrial Park in Buikwe District.
During the piloting period, Consumption of Electricity in the two Industrial Parks is expected to increase to help offset the revenue shortfall that would result from supplying Electricity at Five (5.0) United States Cents per kilo Watt-hour.
d) Charcoal To Power Project
ERA launched a pilot charcoal to power project that targets to transform over 500 institutions from the use of biomass for cooking to Electricity.
Mwanamugimu Nutrition Unit of Mulago Referral Hospital, and the Uganda Prisons Services are the first beneficiaries of the project, and they benefit from a special Tariff of Ush. 451 per kilo watt hour in addition to acquiring modern kitchens that fully utilize electricity for cooking, with the support of ERA and the United Nations Development Programme (UNDP).