Vanuatu: Small Household Bills To Be Cut In Half

Electricity Decision - Small Household Bills To Be Cut In Half

PORT VILA, VANUATU

The Vanuatu Utilities Regulatory Authority (URA) published today its Final Decision as part of its Electricity Tariff Review.

A key part of the electricity tariff decision is a reduction in the electricity tariff for small domestic customers (<60 kWh a month) by 49%.

The Government’s concern with the high price of electricity led it to request a full tariff review by the URA. The Final Decision is the result of a 12 month extensive information gathering process involving UNELCO, the Government, and submissions from stakeholders

“This is the first full review of electricity tariffs for the local monopoly utility in more than 70 years” stated URA CEO, Carmine Piantedosi, “I would like to thank UNELCO for their long and ongoing service to Vanuatu and their commitment to this review process”

After considering public submissions and analyzing UNELCO’s costs, planned investments and reasonable return, the URA’s tariff decision is for a new base price of Vatu 47.17. This tariff will translate into a price reduction of around 6.80% for most electricity users

Existing electricity prices are set by a formula that passes through the changes in diesel prices each month. As part of this tariff decision the new formula will also pass through any benefits from the Port Vila wind farm to electricity customers.

“The Tariff Decision of the URA achieves a balance between the needs of consumers, Government and the need for UNELCO to make a reasonable return.” said URA Chairman, Johnson Naviti. “It provides UNELCO with sufficient revenue to cover all its costs, depreciation, planned investments and a reasonable return on capital they have invested in Vanuatu.”

The Tariff Decision will allow UNELCO to earn revenue of Vt 15.206 Billion over the next 5 years. This is made up of Vt 13.908 Billion to cover costs including fuel, materials, provisions, maintenance, staff and depreciation including the depreciation on new investments. UNELCO also receive Vt 1.299 Billion as the return on capital, including any new investments in UNELCO’s investment plan.

After examining their costs UNELCO voluntarily committed to efficiency gains worth over Vt900 million over the next 5 years.

The URA notes that UNELCO has supplied electricity to Vanuatu for a long time and the quality of their service is high. The URA complements UNELCO on their innovative use of coconut oil and their commitment to renewable energy such as the Port Vila wind farm.

An addendum to the concession agreement has been prepared for issue by the Government reflecting the URA’s final tariff. The final tariff will take effect upon signing of this agreement by UNELCO.

“I would like to encourage UNELCO to pass through the benefits of the new tariff to families, households, businesses and join the Government in endorsing this new electricity tariff” stated Mr Piantedosi.

The details of the URA’s Tariff Review Final Decision Paper May 2010 can be found on the URA website at www.ura.gov.vu

The URA will hold public meetings to explain its tariff decision. Notices will appear in the media.

ENDS

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