URA Congratulates UNELCO on Electricity Price Cuts

PRESS RELEASE

URA Congratulates UNELCO on Electricity Price Cuts

Port Vila, VANUATU 23 June 2010 Following on from the release of the URA’s Final Decision as part of its Electricity Tariff review UNELCO had agreed to cut tariffs voluntarily for small households using less than 60 KWh a month. These customers will receive a 40% reduction in their electricity bills from the 1 July 2010.

These initial price reductions are a welcomed interim measure from UNELCO as they are yet to accept the URA’s Final Decision on the electricity tariff.

Cuts to all other users including small households using over 60kWh, larger households and business are yet to be implemented by UNELCO as they dispute the level of return offered in the URA’s Final Decision.

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

The Tariff Decision if implemented will allow UNELCO to earn revenue of Vt 15,206,000,000 over the next 5 years. This is made up of Vt 13,908,000,000 to cover costs including fuel, materials, provisions, maintenance, staff and depreciation including the depreciation on new investments. UNELCO also receive Vt 1,299,000,000 as the return on the investment they have made, including on new investments contained in UNELCO’s investment plan.

The Governments concern with the high price of electricity led it to request a full tariff review from the URA. After an extensive 12 month process of consultation the URA and UNELCO came to agreement on almost all components of the tariff review. The outstanding point is the reasonable return UNELCO should earn for operating the concession. The URA’s final decision calculated a fair return Vt 1,299,000,000 over 5 years. UNELCO disputes this level and thus an arbitration process is required.

The URA’s Tariff Decision though supported by the Government must still be agreed to by UNELCO before it can come into force. As full agreement has not been reached an arbitration process is required to reach resolution on some of the issues.

The savings to the <60kWh bills, though extremely welcomed by small household consumers make up only a small proportion of the overall savings recommended in the URA’s decision.

“This is the first full review of electricity tariffs for the local monopoly utility in more than 70 years and the process is not yet complete” 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”.

The details of the URA’s Final Tariff Decision can be found at www.ura.gov.vu

ENDS

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