REVIEW OF ESCOM TARIFFS UNDER THE AUTOMATIC TARIFF ADJUSTMENT FORMULA (ATAF)
The Malawi Energy Regulatory Authority (MERA) considered a review of the electricity tariffs for ESCOM under the Automatic Tariff Adjustment Formula (ATAF).
TRENDS IN EXCHANGE RATE AND CONSUMER PRICE INDEX (CPI) IMPACT ON ELECTRICITY TARIFFS
MERA noted that as at February 2020, the last time electricity tariffs were revised following the implementation of the second tranche of the base tariff and the ATAF outcome of that month, the exchange rate was at MK743.81/US$ while the CPI was at 122.6. Since then, the economic fundamentals have remained stable, with the Kwacha depreciating to MK770/US$ as of 4th December 2020, while the CPI increased to 126.1 as noted in October 2020.
Applying the above levels of economic fundamentals to the automatic tariff adjustment formula (ATAF), resulted into 3.39% potential upward tariff adjustment. Based on ATAF principles, the Board resolved to maintain tariffs at the current average of K94.41/kWh as the ATAF outcome is within the ±5% statutory trigger band.