ERB CHECKMATES ZESCO ON STANDARDS

By Jessica Mwansa

Energy Regulatory Board (ERB) Board Chairperson Reynolds Bowa says the ERB has taken into consideration, the need to ensure that ZESCO adheres to its licence conditions and conforms to various standards and codes for enhanced service delivery.

In an interview with The Scoop, Mr. Bowa said the ERB will monitor and undertake performance audits to validate the data and reports submitted by the power utility company on a regular basis adding that this reflected ERB’s commitment to upholding the principles of good governance, accountability, and public interest in regulating the sector.

“As mandated by the Energy Regulation Act no. 12 of 2019 and the Electricity Act No. 11 of 2019, the ERB undertakes operational performance monitoring of enterprises in the energy sector. This important regulatory function is conducted through the use of Key Performance Indicator (KPI) frameworks which help the market to function as if it were in a competitive environment.

“Each specific KPI has been evaluated to ascertain its relevance in addressing ZESCO’s operational problems, consumers concern, as well as meeting ERB’s strategic objectives,” Mr. Bowa said.

He said in developing the framework for 2023 to 2025, the ERB had taken into consideration ZESCO’s past performance and the extent to which the utility had gone in achieving the targets set in the previous framework and as such, the ERB had maintained 10 of the 11 thematic areas with customer metering being replaced with post-paid billing.

“The ERB has however, observed that the KPI framework has lacked the enforcement mechanism except during tariff determination when ZESCO’s performance with regard to KPIs is applied in arriving at the final percentage for the tariff award. In this regard, in implementing this mechanism, the ERB will remain firm and will not hesitate to take action against ZESCO for poor performance arising from factors that are within the utility’s control.

“Being a vertically integrated state-owned utility, ZESCO dominates the electricity supply industry in Zambia and as such, its operations are by default characterized by monopolistic market features. The ERB therefore develops KPI frameworks for ZESCO which among other things seek to set performance targets that act as a proxy for a competitive market,” he said.

He said despite the delayed implementation of the framework, the scoring will commence in the second quarter and ZESCO will be required to populate historical performance data dating back from January, 2023 adding that the framework will continue to be used as an incentive for granting unconditional approval to the multi-year tariffs that were conditionally approved for the years 2024 to 2027.

“Should ZESCO fail to attain a minimum score, the ERB will, on a case by case basis, consider factors that are beyond its control. Further, under this framework there are three major stakeholders that is; the ERB, ZESCO, and the consumers. Consumers are therefore encouraged to provide feedback through complaints and comments as appropriate on the utility’s performance with regards to the KPI’s framework as published in the energy sector report,” he said.