Electricity price hike in the pipeline [1]
Friday, September 1, 2006 - 14:55. Updated on Sunday, September 14, 2014 - 20:40.
Tonga's Electric Power Board is considering a recommended increase in the price of Tonga's diesel-driven electricity by up to 5.21 seniti per kilowatt.
It is almost certain that the rise will be at least three seniti per unit, an amount that was yesterday recommended by TEPB chairman Hon. Siosiua 'Utoikamanu, in response to a request from the sole supplier of electricity for Tonga, Shoreline Power.
But Shoreline wants the TEPB approve an increase of at least 5.21 seniti to cover a steady increase in the price of diesel fuel during the past 12 months. According to Shoreline, between November 2004 and January 2006 the price of diesel went up by 38.27% from $0.8604 per litre to $1.1897 per litre.
The last hike in the electricity tariff was in November 2004 when an additional 11 seniti pushed the consumer price up to 26.6 seniti per kilowatt. This 11 seniti rise has been subsidised by the government, which pays Shoreline $1.8 million annually.
Whether government will increase or terminate its electricity subsidy is another decision that has yet to be made, but this time any increase in tariff has to be paid by the consumers.
Tongan consumers currently pay 56.5 seniti per unit (per kilowatt hour) used, and government pays an 11 seniti subsidy on the first 200 units. The proposed increase of 5.21 seniti along with a loss of the subsidy could raise the consumer price to 72.71 seniti per unit. For consumers this means an increase ranging from 9 % to 29 % depending on whether or not the subsidy is retained.
Consultant
A New Zealand consultant was brought in to look at the electricity pricing. On August 30, Alex Sundakov of the Castalia Strategic Advisors of Wellington, presented his recommendation to the TEPB for an increase of 5.21 seniti per kilowatt. He said that the 5.21 seniti rise was only to offset the increasing price of fuel and it did not take into account other company expenses.
Two members of the TEPB Ramsay Dalgety and Hon. Paul Karalus were to present Alex's recommendations to the Chairman of the Board, the Minister of Finance, Hon. Siosiua 'Utoikamanu.
Then on August 31, Hon. Siosiua 'Utoikamanu in a released statement recommended to the TEPB an increase in tariff of 3 seniti. "A 3 seniti per kWh tariif increase hs been recommended to the Board to reflect the extra cost of gnberating electricity resulting from higher world prices for diesel fuel."
"This year the cost is runningnearly 13 per cent ahead of the same time last year. The government's financial position means that it is impossible to provide another subsidy and triffs must increase to cover higher fuel prices."
He stated that the Board was committed to follow a transparent process by consulting with consumers and civil society before a final decision is made on the tariffs.
"People need to be given an opportunity to understand the causes of the tariff increase and to express their opinion," he stated.