The Electricity Control Board (ECB) is set to modify the Single-Buyer Market (SBM) model which has been adopted by Namibia in order to curb the Namibia Power Corporation (NamPower)’s monopoly, The Villager can reveal.
It is foreseen that the SBM will be modified to allow large customers to procure their own power supply resources directly from other sources, besides NamPower.
ECB Chief Executive Officer Foibe Namene told The Villager this week that the modified SBM will be termed as the Modified Single-Buyer Market Model (MSBM). She further said as part of the energy regulatory framework’s review, the revised model will form part of the new electricity Bill, which is currently under review.
“Currently, the MSBM is being implemented, although not approved yet, as some large power users have started negotiating power supply agreements directly,” she said.
Namene told The Villager that the current SBM structure is categorized as having a single entity. This means that NamPower has buying power from all the power-generators in Namibia, and serves as the portfolio manager for electricity supply to all retail customers, acquiring all resources needed to serve the demand.
NamPower holds a vertical monopoly, which allows it to control all aspects of the production and distribution of power in the country.
Experts had long argued that NamPower’s monopoly in power trade limits the accessibility and affordability of electricity to the whole population.
Namene said the approval of the MSBM is expected to be completed with the promulgation of the new Electricity Bill, which is still under review, and whose expected time of completion is mid-2016. She reiterated that it is anticipated that the SBM will be modified slightly, allowing the largest customers to acquire their own power supply resources directly from other sources.
With the MSBM, large power users who are currently being supplied by NamPower can choose their own suppliers (generators).
Despite the ECB having issued licences to independent power producers (IPPs), entities like Diaz Wind Power, GreeNam Electricity, Xaris Energy and Arandis Power are separately negotiating with NamPower for Power-Purchase Agreements (PPAs) since their licenscs were issued before the Renewable Energy Feed – In Tariff (REFIT) process.
Namene further noted that the rest of the licensees are intended to take part in the interim REFIT Programme. The Electrical System Integration (ESI) mode is following the recommendations which were made by a study carried out on how renewable energy must be procured in Namibia.
“One such recommendation is that any power plant with an installed capacity above 5 megawatts must be procured through competitive bidding, and all capacities less than 5MW will be procured through the Renewable Energy Feed in Tariff (REFIT) programme and net metering for rooftop panels,” Namene explained.
She revealed to The Villager that a total of 27 companies have been shortlisted for the interim REFIT programme and once licensed, they will fill a capacity of 70MW reserved for this programme. “Nine IPPs which were awarded licences as far back as from 2007 have subsequently seen them lapse,” Namene said.
She added that amongst other activities, the ECB is responsible for ensuring energy supply security and private sector participation in generation, and to regulate electricity utilities’ tariffs. This is done in accordance with the White Paper on Energy Policy of 1998, which states that tariffs should inter alia be cost-reflective, reflect the long-run marginal cost of supply and be based on sound economic principles.
“Utilities are regulated based on their revenue requirements, including a regulated return on assets which are used for electricity-generation, transmission, distribution and supply.The tariff methodology used by the ECB is known as a “cost plus” methodology. The revenue requirement of a utility plus a regulated return is determined and approved on an annual basis by the ECB. This determines the overall level of tariffs to be charged to consumers,” she added.
She further noted that the revenue requirements include all allowable costs of the utilities to cover for costs of supply, including primary energy, energy imports, bulk purchases, operating and maintenance costs, overheads, asset-related costs and investment costs.
“In determining this level, the ECB takes into consideration expectations of key stakeholders, including Government, and the possible impacts which the tariff could have on the end-consumers and the Namibian economy at large,” Namene said.