The Energy Regulation Board (ERB) in Zambia has recently blocked Zesco’s proposal for an emergency tariff hike, which the state-owned utility had sought to address a looming power deficit in September 2024. Zesco’s application aimed to raise tariffs across various customer categories to generate $14 million monthly. The additional revenue was intended to fund the importation of 300 megawatts (MW) of electricity during maintenance periods at Maamba Energy and the shutdown of the Kariba North Bank Power Station.
The proposal included:
- Restructuring residential tariffs
- Reducing rates for small commercial consumers using less than 100 units
- Increasing tariffs for commercial customers consuming more than 500 units
- A 30 percent increase for maximum demand customers
Zesco hoped these measures would enhance energy efficiency and promote alternative energy sources such as solar and liquefied petroleum gas (LPG). However, after a public consultation, the ERB rejected the proposal, citing several concerns.
ERB Board Chairperson James Banda highlighted that despite the proposed tariff increases, Zesco had no plans to reduce load shedding hours, which would continue to affect business operations adversely. The ERB was also concerned that the increased tariffs might not achieve the $14 million target due to suppressed demand and could lead to higher operational costs for businesses, potentially causing job losses and inflation.
Moreover, the ERB expressed doubts about the reliability of power imports and the slow adoption of alternative energy sources by low-income households. The board emphasized that the tariff hikes could have broader negative effects on the economy and energy transition efforts.
Instead of the proposed increases, the ERB has directed Zesco to implement austerity measures, provide regular updates on power importation plans, and intensify public awareness on energy conservation. The ERB also plans to collaborate with the government and Zesco to explore alternative solutions to the power crisis.
