The price of electricity throughout Tonga will go up by 6.8 seniti per unit at the next meter reading in early August. The 11% increase is retrospective to the July electricity use.

It is the second increase in 10 months.

Hon Paul Karalus, a member of the Tonga Electric Power Board, said that the price hike is to offset a 17% rise in the price of diesel fuel, which came into effect this month.

Under the new current rate the 6.8 seniti increase sets the price of electricity per kWh/unit for Tongatapu up from 61.71 seniti to 68.51 seniti; Vava'u up from 63.71 seniti to 70.51 seniti; Ha'apai up from 56.71 seniti to 63.51 seniti; and 'Eua up from 56.71 seniti to 63.51 seniti.

The last increase in the price of electricity was in September last year by 5.21 seniti per kWh/unit.

Six months

Paul said that the new fuel price adjustment would remain in force until a new tariff is set in six months time so during this period the fuel price will be monitored and any major change in price can determine future tariffs.

He said that in June this year the price of diesel fuel supplied to Shoreline came under the price control of the Competent Authority of Ministry of Labour and Commerce. This came about because Shoreline scheduled a termination of its contract with the British Petroleum in anticipation of a sale to North Power, "but after 16/11 North Power lost interest in Shoreline."

The Competent Authority in affiliation with the Forum Secretariat is responsible for setting the price of fuel in Tonga. The only fuel consumers who are outside the authority of the Competent Authority are big consumers like Shoreline who can negotiate a contract price with the fuel supplier.

Paul said that when the diesel for power generation, came under the Competent Authority there was a slight reduction in the fuel price, delaying the need to review the tariff, "but after the 17% hike in the price of fuel from $1.25 to $1.47 per litre this month, there was a need to review the tariff and the money generated from the payments of electricity bills.

New formula

"The board then applied a new formula drawn up by the Castalia Strategic Advisors of Wellington in May, in which it firstly taking into account that for one litre of fuel they know how many units there are. For example, in Tongatapu there are 4.1 units and for the outer islands there is 3.7 units.

"The difference in these figures is due to a variation in the efficiency of generators, which in the main island the machines are mainly new in comparison to the outer islands.

"The second factor was the distribution of electricity through the power lines, which proved there was some loss due to either bad lines, the connection or distance from power machines to the businesses and domestic.

"They estimated this loss to be an average of 13% in Tongatapu reaching 19% loss in Ha'apai and 'Eua and 15% in Vava'u which was covered by the board.

"But in reviewing the 17% rise in the price of fuel and applying it to the formula we concluded that there should be an increase in the price of electricity by an overall of 6.80 seniti for Tonga." Paul said that the other non-fuel costs were excluded from their calculation of the new price, and the 11 seniti subsidy covered by the Government on the first 200 units still applies.