The Egyptian Electric Utility and Consumer Protection Regulatory Agency (EgyptERA) is updating the costs of electricity production, transmission, and distribution, on which the electricity tariff is determined, in preparation of repricing the service in the country.
An informed source told Daily News Egypt that four criteria are taken into account when calculating the electricity tariff: costs of production, transmission, and distribution, periodic review and evaluation of the tariff, the gradual removal of subsidies, and the expected impact of the tariff restructuring on the household sector.
The source said the criteria for calculating the service cost include the cost of each stage from production until distribution of electricity on the basis that the electricity companies achieve the revenues that cover the investment cost and operating expenses.
The cost is distributed to the subscriber groups according to the voltage. It is known that all cost components other than fuel are considered a fixed cost that depends on the plant’s nominal capacity and does not change with the change in the amount of energy produced.
The source pointed out that the Egyptian pound exchange rate against the US dollar and the price of natural gas are two main factors in determining the electricity tariff to be applied next July within the plan to lift subsidy on electricity.
He emphasised that the increase in electricity price will not affect the low-income groups and will vary according to the consumption rates, with continued exchanged subsidies from high consuming segments to lower ones.
The source ruled out reducing the electricity tariff on the industrial sector during the next fiscal year, especially since the prices are still subsidised and there is a financial deficit in electricity companies.
The source noted that the US dollar exchange against the pound is not only the main criterion in cost calculation, but the gas price is also a major factor.