Determinants of Base Electricity Tariffs for Domestic Consumers in Uganda.
No Thumbnail Available
Date
2024-11-14
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Makerere University Business School
Abstract
This study conducted an empirical analysis to identify the determinants of base electricity tariffs for domestic consumers in Uganda. Employing the autoregressive distributed lag method, data from UMEME’s domestic consumers, sourced from the ERA database, were analyzed. The key variables investigated included base electricity tariffs, electricity demand, electricity distribution losses, and operations and maintenance costs. The ARDL model focused on the direction and significance of the regression coefficients.
The findings revealed that UMEME’s electricity distribution losses had a positive impact on base electricity tariffs in both the short and long term, indicating that higher distribution losses lead to increased tariffs. Additionally, UMEME’s operations and maintenance costs significantly and positively affected the base electricity tariffs in the short run, suggesting that higher costs in these areas also drive up tariffs. Conversely, domestic electricity demand did not significantly influence base electricity tariffs, likely due to the relatively low demand levels in Uganda.
The study recommends implementing extensive metering, investing in and adopting better technology, and practicing preventive maintenance to reduce electricity losses and thereby lower base electricity tariffs. Furthermore, electricity distribution companies should adopt lean practices to minimize operations and maintenance costs. The ERA is advised to encourage distribution companies to expedite grid extension to domestic households, which would boost demand and create economies of scale, ultimately leading to lower electricity prices.
Description
This is a master's thesis.
Keywords
Citation
Nakwanyi, B. (2024) Determinants of Base Electricity Tariffs for Domestic Consumers in Uganda. (Unpublished master's dissertation). Makerere University Business School, Kampala, Uganda.