Competition and Tariff Commission order against ZESA

It is hereby notified, in terms of section 31(4) of the Competition Act [Chapter 14:28], (hereinafter referred to as “the Act” that: the Competition and Tariff Commission (herein after referred to as the “Commission”) conducted a full scale investigation, in terms of Section 28 of the Act into the investigation of abuses of monopoly by ZESA Holdings (Private) Limited (hereinafter referred to as ZESA) through excessive tariffs, charging of electricity not consumed through use of estimates in billing and arbitrary disconnection of electricity supplies to domestic, commercial and industrial customers.

The Commission at its Special Meeting held on the 8^th July, 2010 found that the allegations against ZESA constituted restrictive practices that are a manifestation of abuse of monopoly and resolved to make the following order in terms of Section 31(1) of the Act:

1.     THAT ZESA in arriving at the tariff using their pricing model should adjust for the following:

(a)    In respect of Zimbabwe Power Company (ZPC) ZESA should use average normal energy generation capacity, that is, average normal load factor and exclude return on assets and fixed costs of small thermal power stations.

(b)   In respect of Zimbabwe Electricity Transmission and Distribution Company (ZETDC), ZESA should use standard normal transmission and distribution loss factor of energy.

2.     THAT ZESA should use actual meter readings when billing its customers subject to the provisions of the Zimbabwe Electricity Supply Authority (Miscellaneous Charges) By-Laws, 1988 published in Statutory Instrument 155 of 1988.i.

3.     THAT with respect to arrears:

(a)    In respect to metered domestic consumers based in Harare and Bulawayo:

(i)    The 1^st February, 2009 should be used as the stating point of ZESA’s new billing period, and that all outstanding charges arising from electricity consumed prior to this date should be written off.

(ii)   The charges in respect of electricity consumed excluding fixed charges between 1^st February. 2009 and 30^th November, 2009 should be in accordance with the Minister of Energy and Power Development’s directive, that is, US$30 per month for domestic consumers in low density areas.

(iii)  All excessive payments made on the basis of estimated bills and reconnection fees for those consumers whose power was disconnected after having paid according to the Minister’s directive, stated above, should be credited to the affected consumer accounts.

(b)   In respect of the non-metered domestic consumers countrywide with load limiters, ZESA must reduce the fixed monthly energy charges to 57%, this being the ratio of the power availed for use by consumers monthly for the period between the 1^st February, 2009 and November 2009. From 1^st December, 2009 onwards, the fixed monthly charges for such consumers should be based on power availed taking into account load shedding.

(c)    In respect of all other consumers, namely, industrial; commercial; mining; farming; schools; universities; government institutions; hospitals and other commercial entities, they should approach ZESA and submit their electricity consumption where readings are available, where readings are not available and the parties fail to agree on respective consumption levels, a mutually agreed arbitrator should be appointed.

4.     THAT ZESA must load shed in a fair and equitable manner and advice customers of the basis or reason for the load shedding.

Parties to the alleged restrictive practice or any other interested persons may obtain a written statement of the Commission’s reasons for publishing this notice from the Commission’s Offices.

The Director

Competition and Tariff Commission

No. 1 Kwame Nkrumah Avenue

Block One, 2^nd Floor

Private Bag 7774

Causeway

HARARE

Tel: (04) 775040/5, 771126/9

Fax: (04) 770175

Email: [email protected]