10 December 2012

Ethiopia: New Energy Bill Seeks Powerful Regulatory Body

The Council of Ministers is seeing a new energy bill that elevates the Ethiopian Electric Agency (EEA) to an authority with more regulatory power and revenue generation capacity.

The Bill that could replace the energy law that has been in place for 15 years suggests a board of five members for the Authority-to-be. If ratified as is, the Authority could have powers not only to regulate energy efficiency and conservation, but to set off-grid tariff rates, and to license individuals and companies that involve in any kind of electrical works.

The Agency had suggested in an initial draft sent to the Ministry of Water & Energy (MoWE), to which it is responsible, to be in charge of setting tariffs for both grid and off-grid power.

Currently, EPPCo sets tariffs for grid power supply while off-grid supply, such as power from diesel generators, is sold at rates fixed by suppliers. In the Southern Regional State, for example, people are charged 10 Br a month for one bulb by diesel power retailers.

The Ministry told the Agency that grid power tariffs would remain under the jurisdiction of the EPPCo, while the new Authority suggested in the bill could regulate off-grid power generation. Off-grid power is currently neither licensed nor regulated by the government.

The Bill allows the Authority to be involved in the regulation and conservation of power, including undertaking mandatory energy audits of companies. EEPCo has been trying to minimise waste by having large consumers install power factor correctors; however, this has not been as successful as had been originally promised because the Metal & Engineering Corporation, an industrial complex, was unable to deliver enough correctors.

Four months ago, the Agency conducted power consumption audits of 3,000 factories in food and beverages, textile and cement sectors as a pilot project. It praised some and recommended power saving mechanism for others. The Authority could also conclude a voluntary agreement with factories, in which the latter will commit to reduce power wastage.

"It is because electricity conservation is as important as generation," said Takele Mekonnen, head of demand side management at the Agency.

The Authority can also force high energy consuming industries to establish their own energy management unit and submit periodic report to the Authority.

Such regulatory activities, however, may be applied across all sectors where there is high power consumption, such as factories, the upcoming electric train system, commercial buildings and technologies related to electrical appliances, according to the Bill.

The new bill also requires any person or company that engages in electrical works such as electrical design, installation, maintenance, testing, inspection, electromechanical service and consultancy, to have a certificate of competency in order operate in the sector.

Currently, the EEA only certifies those who engage in installation service up on giving oral and written exams. When the proclamation comes into force, companies that currently are engaged in any of the electrical works to date are required to obtain a license.

A person or a company that undertakes any of the electrical works without having the license will be punishable with 10 years rigorous imprisonment and up to a 15,000 Br fine, according to the draft.

Though the experts at the Ethiopian Electric Agency (EEA) were eying in establishing an independent organ with the power to determine grid tariff which is currently the power of power utility to date, the upcoming authority is given the power to determine off-grid tariff only.

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