Page 30 - EPSI Magazine Issue 8 final 2018.indd

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Generation tariffs

Capacity Vs Energy Deal

Generation tariff setting depends on whether payments relate to
energy generated or for the capacity available

Capacity Deal: Energy Deal:
Tariffs determined to meet costs of • Price and payments based on energy delivered.
investments, financing, operations and Examples are the small and mini-hydros.
maintenance BASED THE PLANT CAPACITY Hybrid model:
irrespective of energy generation • Capacity and Energy. Examples are the Thermals.
Consideration is made for variable e.g. Capacity deal to cater for Fixed O&M, Investments.
costs of fuel for thermal plants E.g Eskom Energy deal to cater for fuel as and when they are
and Bujagali.
dispatched.

Contracting Framework: Generation

Common Tariff Determination Options in Uganda: Generation

Feed-In-Tariffs: Tendering:
Bilateral Negotiation: Standard tariffs based on average
Tariff determined based on costs specific to generation Standard tariffs based on
average costs specific to
specific financial projection in capacity range and technology-
the model. generation capacity range and
Policy and guidelines. technology.

Contracting Framework: Generation

Licensing:
• Upon completion of completion of Power Purchase Agreement (PPA):
feasibility study. • Sets a framework for sale and purchase of power: Licensee
• Enables operation and sets is the Contracted Party.
conditions and terms. • The terms of supply, interconnection, metering, dispatch,
• Sets the tariff and/or tariff off-take, billing, payments, guarantees/bonds damages,
methodology. resolution of conflicts etc.; and tariff/methodology .

Setting of bulk supply tariff

• The Bulk Supply Tariff (BST) is the price at which the transmission company sells electricity to
distribution companies.
• The BST is charged for peak, shoulder and off-peak time of use periods.

• It is based on the revenue requirement of UETCL which is derived as a sum of O&M, Net power
purchase costs, and debt service costs (No allowance for depreciation and return on equity) divided
by bulk energy sales by UETCL.
• Energy sales by UETCL is derived as energy purchased adjusted for transmission losses.
• The transmission company has been regulated under a Multi Year Tariff regime.

• There is incentives to increase efficiency; reduce costs and achieve energy loss target.
• Benchmarking is key & value for money assessment is necessary.