business

Aug. 3, 2021

STAFF REPORTER

3 min read

LEC proposes 'exorbitant’ tariff increase

LEC proposes 'exorbitant’ tariff increase

LEC substation transformer

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THE Consumer Protection Association (CPA) has strongly opposed Lesotho Electricity Company (LEC)’s proposed nominal tariff increase of 30.9% on both Energy and Maximum Demand (MD) charges across all customer categories for the 2021/22 financial year, contending it is excessively high.

The Chairperson of CPA, Khoabane Khalema said Lesotho’s current economic status does not allow such an increase, adding that the COVID-19 pandemic has also heightened the situation through massive job losses and closure of several businesses.
He said consumers do not have money due to the sluggish economy and therefore if commodity prices keep on increasing, all consumers will end up not having enough to cover their basic needs.

“We understand that the tariff has not been increased like the company had proposed for the past two years, however, LEC has to prioritise issues like maintenance” Mr Khalema said, adding that staff salary hikes should nonetheless not be the main reason for the proposed tariff.
“LEC should go back to the drawing board and propose a lower tariff, between 10 and 15 percent, which will be reasonable in the current financial situation,” he said, adding that the CPA is against anything beyond 15 percent.

Meanwhile LEC's proposed tariff of 30.9% on both Energy and Maximum Demand charges across all customer categories translates into a M1.24 billion revenue requirement.
In its proposal, LEC states among others the need to strengthen its network and improve electricity reliability as well as replace old assets.

The company says it has to undertake high network repairs and maintenance costs.
In particular LEC has mentioned the following items as the main cost components of its revenue requirement: the Electricity Bulk Purchases costs M621 million, Operating Expenditure M125 million, Network repairs and Maintenance costs M66 million, Depreciation costs M137 million, Labour costs M216 million and Return on assets costs M68 million.

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In accordance with Section 24 (6) of the Act, Electricity Supply Industry (ESI) stakeholders and the public are informed and further invited to provide comments and inputs on the application for consideration before LEWA makes a final determination.

Interested people, who wish to present their views before the LEWA Board, during virtual public hearing sessions, are requested to express so in writing when submitting their comments. The deadline for receiving written comments is August 19.
LEC is a government entity that holds a composite licence issued in terms of Section 50 of the Lesotho Electricity Authority Act no. 12 of 2002 (LEA Act), as amended and this Application is in line with Section 24 of the LEA Act.
LEC buys electricity from the Lesotho Highlands Development Authority (LHDA) through its 'Muela Hydro-power station, ESKOM in South Africa and EDM in Mozambique through 132kv and 88kv networks.
In Qacha's Nek, LEC purchases electricity from ESKOM through a 22kv line from Matatiele in South Africa and Qacha's Nek is the only district that is not yet connected to the main national grid. LeNA

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