KAMPALA — Uganda aspires to attain middle income status by 2040 and a key driver of this agenda is industrialization. A number of policies and programs have been established and key sectors re-focused to expedite the process.
The Electricity Sub-sector is pivotal to this aspiration and its genesis can be traced back to the colonial period, when the need to add value to Uganda’s products in order to gain a competitive edge in global markets became eminent. The Sector automatically assumed its ‘priority status’.
However, over two decades ago, the Sector was marred in challenges that threated its contribution towards the economic transformation of the Country. To leverage the situation, the Government was forced to make reforms.
Among the reforms made was unbundling of the UEB and establishment of a Sector Regulator – Electricity Regulatory Authority, to oversee the unbundled Electricity sub sector.
In its two decades of existence, the Electricity Regulatory Authority (ERA) has made its mark regulating Uganda’s power sector, with its influence felt on the African continent too.
In 2018 and 2019, the Electricity Regulatory Index report released by the African Development Bank (AfDB), ranked Uganda’s ERA as the best electricity regulator on the continent, an accolade that buttresses the strides made by the regulator as it marks two decades of existence.
But what does ERA do?
The Electricity Regulatory Authority (ERA) is a creation of Section 4 of the Electricity Act, 1999.
It started operating in April 2000 to execute the roles spelt out in Section 10 of the Act.
One of its functions is to receive and process applications for licences for the generation, transmission, and distribution of power and to accordingly issue such licences.
A person or an entity that wants to start a project in the electricity sector must first notify the authority.
If a person supplies electricity or puts up a supply grid before getting authorisation from ERA, that person could be charged with breaking the law.
And if convicted, he or she would have to pay a fine not exceeding three-hundred (300) currency points (not exceeding Shs6 million).
The Act additionally tasks ERA with defining the conditions and terms of the licences, modification of licences where need be, and with making and enforcing directives.
It is the authority’s mandate to create a tariff structure, approve the charges, and terms as well as conditions of electricity services provided by the utilities.
To illustrate its function of approving charges, once annually – usually towards the end of the year, the regulator asks the licensees to submit their tariff review applications for the following year.
It is in those applications that the licensees state their planned investment costs, which the authority bases on to call a public hearing on the applications.
While determining the end-user tariff, the regulator will consider the utilities’ reasonable investment costs and the public concerns to arrive at the final tariff.
Should licensees invest money without getting the regulator’s approval, the unapproved investment would not be considered for recovery through the tariff.
The law furthermore authorises ERA to advise the Minister of Energy on the need for the electricity sector projects.
In that regard, it is ERA that will often draft for the minister a Cabinet Paper on the electricity sector.
Relatedly, when a committee of Parliament summons the Energy minister to clarify on some issues about the sector, the Minister is likely to carry along ERA’s top brass to explain the issues to the Members of Parliament.
Preparing such statements for the Minister comes naturally to ERA because it is the body that gathers information about generation, transmission and distribution companies and prepares the industry’s reports.
So, one could say the authority is the repository of electricity supply industry information.
The law also gives ERA the mandate of collecting licence fees from applicants for licences and to provide the framework for investment programmes.
ERA also sets the standards for the quality of electricity supply services.
For example, through System Average Interruption Duration Index and System Average Interruption Frequency Index, it monitors power distribution quality and accordingly rewards or penalises the distributions that fall short of the set standards.
Relatedly, in August this year, the regulator released the Electricity (Acquisition and Use of Wooden Poles in the Electricity Industry) Guidelines, 2020.
The guidelines, which will take effect from March next year (2021), are meant to ensure transmission and distribution licensees adhere to quality standards for wooden poles on their networks.
The rules were informed by cases of wooden poles breaking down or rotten within a few years of being installed on the network.
That consequently impacted on power supply since poor quality poles must be replaced, which necessitates turning off supply to the line to protect the lives of the technicians.
It is ERA’s job to ensure the licensees comply with the conditions of their licences and to protect the interests of the consumers in respect of the prices, charges.
In case the licensees are not operating in accordance with the licences, the regulator will direct them to rectify the breaches.
The authority has power to revoke the licences of entities that are not operating within the terms and conditions of their licences.
Licensees that are not satisfied with the regulator’s directives, could within twenty days of receiving the decisions, appeal to the Electricity Disputes Tribunal.