Page 29 - EPSI Magazine Issue 8 final 2018.indd

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Tariff determination methodology

Reasonable Reasonable Reasonable
Tariff = Generation + Transmission + Distribution (Revenue Requirements)
costs costs
costs

Total purchased units kWh * (1-Target Loss Factor)

Tariff for
End User = Generation Tariff Transmission Tariff Distribution and
Tariff + +
Supply

Economic Regulation framework

RATE OF RETURN (ROR) REGULATION - Regulators de- c) Bagasse co-generation
termine the allowed revenue requirements, including d) Solar
AN ALLOWED RATE OF RETURN on asset base. e) Heavy Fuel Oil
INCENTIVE BASED REGULATION - Incentive based reg-
ulation or performance-based regulation is designed Generation mix
with a ‘penalty and reward’ structure. The regulator
sets a performance target to be achieved by a Licensee
and when the Licensee exceeds the target, it retains
the financial benefit. Performance targets include;-

• Distribution operation and Maintenance costs
• Days Lag
• Target Uncollected Debt Factors
• Distribution efficiency
• Distribution loss factor

In Uganda we use a hybrid of rate of return and incen-
tive based regulation

Generation tariffs
ERA has continued to encourage investment in
In the Electricity Supply Industry, ERA has licensed renewable energy through among other initia-
Generation from the following sources; tives establishment of a Renewable Energy Feed
a) Large Hydro power plants in Tariff. During 2017, 90% of the energy genera-
b) Mini-hydro power plants tion was from renewable energy sources.