Post on 16-Oct-2021
Regulation of the Gambian Electricity Sector
M.L Sompo Ceesay.Snr. Engr. (Electricity)
Presentation PURA StructureDaily business
Electricity Market Structure Tariff Setting& Structure Recommendations
PURA Structure
Source of FundingBudgetLicences
PURA Multi-sector Regulator
Est.PURA Act 2001 Electricity/Water/Telcoms
Transport, Broadcasting, Postal Services
Board of Commissioners Director General & 30
Staff Quality of Service Tariff Regulation
Electricity efficiency Apply & Set Performance
Standards
OrganogramBoard of Commissioners ( ex officio, non-executive, executive, secretary )
DG
HR & Admin
Admin/ HRSupport Services
Economic Reg.
Tariffs and Market Reg. Fin. Analysis
Ex.Com.Technical
Telecoms Energy & Water
Spectrum Managment
DG's OfficeLegal / PR
Consumer Affairs
ComplaintsConsumer outreach
Funding of the Authority According PURA Act The funds of the Authority shall include –
funds appropriated to it by the National Assembly; loans granted to the Authority;monies accruing by way of licence fees and charges and other fees and charges; and any grants and gifts made to the Authority, provided that the terms and conditions attached to a
grant or gift are not inconsistent with the functions of the Authority.
Source of Funding
0
5
10
15
20
25
30
35
40
45
50
2005 2006 2007 2008 2009 2010
Inco
me
Mill
ions
Years
Other Income
Investment Income
Interest on Loan Repayment
Interest Earned
Application Fees
Regulatory fees
Government (Subvention)
Distribution of Income Source 2005 -2006
Budgeting
Budget Process Staff develop workplans Management makes a
proposal to the Board Board approves the
budget. Regulatory fees are
charged based on this figure to all operators
Budget implementation Projects and programmes
approved by the DG Budget surplus are rolled
over
However Arrears in regulatory
fees Mostly from State
companies Privet licensed
operators usually pay
General:Licensing Framework
Application for a Licence PURA Act ( Section 22) An application for a licence
shall be made to the Authority; in a form approved for the
purpose by the Authority; and accompanied by such fee
and documents as the Authority may determine.
Approval of Licences The appropriate person shall, on the
advice of the Authority, issue a licence on an application made under Section 22, if the Authority is satisfied that –
having regard to the purposes of this Act, it is in the interest of the public to do so;
the applicant has adequate facilities (including financial facilities) and experience to provide the regulated public service in a satisfactory manner.
the applicant has complied with the conditions of a
previous licence issued to it under this Act or any other legislation, to provide a regulated public service and it appears to the Authority that the applicant would also comply with the conditions of a new licence if one were to be issued to the applicant; and
Specifics: Electricity Act
Conditions for issuance of licencesSection 7. (1) The Authority shall advice the Secretary of
State to issue a licence only to a person who (a) has established competence to operate within the electricity sub-sector; (b) is able to satisfy the service obligations under this Act and the conditions to be included in the licence; and (c) has satisfied the other requirements of the Regulatory
Authority Act (PURA Act).
Regulatory Instruments
Licensing ICT Act 2009 Electricity Act 2005
Generation Transmission Distribution Dispatch
EIA, GIEPA, Feas.Study,FinancialResources etc
Application Form Standards
Enforcement Enforcement
Regulations 2009 Electricity (Interim
Licences Regulations) 2006
Electricity Tariff Filing Guidelines
HSE GuidelinesMin. Quality (AFUR) of
Services Guidelines
Energy Efficiency
Energy Efficiency Awareness CampaignOn Newspapers & Radio ProgrammesPresentations and Demonstrations
2008 CFL Pilot Project Installed 2000 bulbs in Kanifing South
Switched for free /incandescent bulbs Reduce domestic consumption Saving for consumers Improvement in voltage levels
Community Wind Project
MoU: Dept. of Water Resources Monitoring of domestic
Water quality WHO drinking water quality
Very quarter national water sampling
Outsource Lab. Analysis Annual Disbursement to
Abuko Lab D150,000/ (US $5,000) yr
Lab equipment, reagents,
D35,000 ($1,200) quarterly Monitoring and sample
collection
Consultation
Internal Professional Staff Meetings
Discuss urgent issues
Directorate Meetings
Management Meeting
Board Meeting Quarterly
External Consumer Parliament Public Hearings
Each time there is a Tariff increase Feb 2011
Bantaba’sPublications
Mainly Newspapers
The Market Structure
Type of Market StructurePre-2005 2006 – 2011 ????
Own Generation
Consumers
IPP
T & D
Generation
& Transmission
& Distribution
Consumers
T
IPP
Consumers
IPP IPP IPP
Consumers
WholesaleMarket
D D
MonopolyModel
Single BuyerModel
Wholesale CompetitionModel
IPP
157million kWhD700 million revenue
225 million kWhD1.3bn revenue
Long Term Analysis
0
50
100
150
200
250
1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
Annu
al P
rodu
ctio
n/ G
Wh
Years
Historic Production of Electricity
GWh
18MW KPS
25MW BK.IPP
6.4MW KPS
3.4MW KPS
Consumption by Customer Class
78 GWh was consumed through Prepayment
113 GWh was consumed through Credit metering
37%
6%
46%
0%4% 7%
2010 Electricity Consumption(113 GWh Credit only)
Domestic
Commercial
Major Consumers
Agriculture
Local Govt.
Central Govt.
Contribution of losses
0%
20%
40%
60%
80%
100%
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Perc
enta
ge S
hare
Years
Energy Consumption by Sector including Losses
Residential Commercial /Institutional Other Losses
National Electrification
Network more developed along the coast Rural Urban Migration
Further increasing pressure on inadequate services!!
National Electrification
GBOS/NAWEC
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Greater Banjul Area
Western Region Upper River Region
Lower River Region
Central Region North River Region
Rat
e of
Ele
ctrif
icat
ion
Regions in The Gambia
Electrification Rates by Region 2008-2010
Electrification Rate 08
Electrification Rate 10
IPP Experience Global Energy Group25MW
65% of Gen.Almost 20hrs
electricityBenchmarking
More eff. than KotuReview of Contract
Can be improved
Unsolicited offers Investors set terms for
government Thames Energy (6yrs negotiation), FRAMA S.A, NOVONO Ltd. Etc Malaysian Group
Effectiveness Pressure to bypass statutory
institutions like PURA
A lot of Agreements but no nothing on the ground No concrete action
Tariff Setting
Electricity Act: Section Section 18. The Authority may,
determine, review, approve, modify or refuse the tariffs .
Section 22. A tariff shall, if approved by the Authority Come in effect 90 days after submission
Section 19.The Authority shall, in determining tariffs for electricity power services under section 18,, take into account the need to – protect consumers against monopolistic prices; provide licensees with an opportunity to recover-
the efficient costs of providing services, including prudently incurred capacity, transmission, fuel, operating, and maintenance costs, the principal and interest on money borrowed for prudent investments and working capital, and a just and reasonable profit on invested equity, sufficient to attract financing for capital improvements and new construction;
reflect cost and other appropriate differences between classes of customers and type of service, subject to applicable direct subsidies; and
provide for costs to be recovered from each customer class in proportion to the costs of serving that class.
Procedures Manual
PURA Tariff Guidelines for applications Data requirements etc
Annual filings:
Pass throughs Reviews of fuel costs, and PURA decisions about whether deviations of
actual fuel costs relative to expected values require an adjustment to prevailing tariffs,
shall be conducted twice a year Evidence of variation during last 6 months
True – ups reconciliation process focused on analyzing the extent to which actual
costs incurred by NAWEC deviated from forecasts embodied within the associated revenue requirement computations
Conducted annually submit actual and previously estimated values for all data elements
Annual ApplicationACTIVITY DATE
NAWEC submission of tariff proposal, with supportingdocumentation, to PURA October 1
Presentations to PURA, with stakeholder representatives,including designated consumer groups, allowed to observe October 8
Stakeholder requests for information and clarification fromNAWEC submitted to PURA for review October 22
PURA delivers to NAWEC questions and identification ofadditional information required October 29
NAWEC submits responses to PURA November 12
Public hearings where stakeholders appear before thePURA, with NAWEC personnel present, and NAWECmakes final presentations to PURA
November 19, 20
Decision of PURA December 10Publication of the tariff by the utility December 17Tariff takes effect January 1
Pass ThroughsACTIVITY DATE
Conducted Twice in the Year
NAWEC submission to PURA of data, withsupporting documentation, on differencesbetween fuel cost expectations incorporatedwithin revenue requirement and actual costsincurred throughout the second half of theprevious calendar year, and alsorecommendation on appropriate adjustment, ifany to current revenue requirement
February 1 / august 1
Presentations to PURA February 8 / august 8
Decision of PURA on appropriate tariffadjustment, if any, to take effect on March 1 February 15 / august 15
The Basic Methodology
Cost of Service vs. RPI-X
We use Cost of ServiceThe central construct within the traditional
cost of service (COS) framework for utility pricing is the annual revenue requirement. This provides the basis for the tariff development.
Rate Base Accounting Principles
Plant & Equipment
Shareholder equity
Long term debt
Work in Progress
Accumulated Depreciation
Rate Base Re-arranging:
D + E = PE - AD + WIP + CA -CL - CC
Rate Base = NET Asset Value + Construction Work in Progress + Work in Capital – Customer Contribution
RR = RB x AR + Exp.
Average Price per unit of Service
Tariff = Revenue Requirement DExpected Sales kWh or m3)
(a kWh of electricity or a cubic meter of water or sewage)
PURA Tariff ModelData Input 2010 (2011)
Electricity RR & Avg Price
Water RR & Avg Price
Data Input
Sewerage RR and Avg Price
Intermediate Computations
Revenue Requirement and Average Prices
Retail Tariff Proposed Retail Tariff
Incentive(s)
True-ups
Incentives in-built in the Model
What are we paying for in each kWh?
Generation Costs. Including from the IPP
Dal
asi/k
Wh
6
7
Transmission &Distribution Costs
(about 8%)Subsidies for theProvincial operations
Network Losses
Domestic Industrial
Policy Interventions
Tariff Constraints Lack of Audited AccountsLack of Fixed Assets Register
Transfer of Assets from GG to NAWEC Should customers pay for free Assets?
Lack of Subsidiary loan agreements with GG
Lack of Regulatory AccountsWater/Electricity etc
Lack of Loss Control StrategyAnnual targets
Regional Benchmarking
0
5
10
15
20
25
30
35
NAW
EC
Sene
gal
Gha
na
S.Af
rica
US
$ c/
kW
h
ECOWAS + S.Africa
Regional Electricity Prices 2011
Domestic
Industrial
Tariff Related Issues
Network Expansion Current Policy
NAWEC benefits from people financing their expansion
Counter productive No incentive for People to
invest Leads to disputes
148 complaints
Meters Cost of Meters too high
More transparency Should meter be paid
upfront?
Meters should be capitalised in included in Rate Base Like all long term assets Customers get it for Free
Understanding Energy Balance
Industrial
Cashpower
Residential
Commercial
Government & AgricultureUn-metered Energy
57,200 MWh (26.5%)
77% of KPS output
Brikama Power Station (GEG)
142,500 MWh
Kotu Power Station NAWEC
74,000 MWh
Commercial Losses
27.04%
4.86%
5%-10%
6.75%
37.98%
26.34%
Transfer Energy 7,500 MWh
216,500 MWh Injected 150,000 MWh Billed
Acceptable Technical(10-12%)
Non Technical Losses (14%) Commercial(5%)
Recommendations
Recommendation
Introduce Policies to promote competition Divestiture of State interestMore room for private participation
Unbundling of NAWEC Diversify fuel sourcesPromote Renewables
Interconnect with Senegalese system