The Electricity Control Board of Namibia (ECB) is finalising a comprehensive review of the Economic Rules, Net Metering Rules, and the Tariff Methodology for generation, transmission, and distribution.
This follows widespread stakeholder consultations that started in 2023. The final stakeholder validation engagement was held in Windhoek on 9 February. Key stakeholders in the Namibian Electricity Supply Industry (ESI) who were consulted in the review process include the Ministry of Industries, Mines and Energy, NamPower, Regional Electricity Distributors (REDs), Independent Power Producers (IPPs), and industry associations such as the Renewable Energy Industry Association of Namibia (REIAoN).
ECB Chief Executive Officer Robert Kahimise described the regulations as the foundational pillars for Namibia’s electricity sector’s future. He said there was a need for Namibia to have a cohesive regulatory framework designed to address both immediate challenges and long-term ambitions of the energy sector.
The ECB enforces economic rules to ensure efficient, sustainable electricity provision, covering tariffs, licensing, and market regulations. Key pillars include cost-reflective tariffs, financial viability for licensees, and protecting consumer interests. These rules, mandated by the Electricity Act (2007), facilitate a competitive, transparent industry.
UNCHANGED FOR 20 YEARS
“The need for this integrated review is clear: The Tariff Methodology, largely unchanged for nearly 20 years, requires modernisation to drive efficiency. We must move towards a structured, transparent, and performance based system including multi-year pricing to incentivise real operational improvements, ensure vital network investment, and manage costs effectively within our evolving market structure,” said Kahimise.
The proposed Tariff Methodology for the Namibian ESI is a cost-plus-return methodology implemented on a performance-linked Multi-Year Platform (MYP).
The Tariff Methodology’s MYP framework is a revenue requirement multi-year framework, i.e. allowed revenue requirement per licence is determined in the MYP for up to five years. The annual tariff review process is limited to adjusting the pre-determined revenue requirement for agreed external and internal parameter variations and using this adjusted allowed revenue to determine the tariff rates and proposed revenue for the year under review. Detailed tariffs are not determined for future years. The overall tariff path is forecasted in the MYP model for the MYP timeframe, based on forecasted sales volumes and costs.
The multi-year cycle is proposed to be five years, however at least the first cycle is to be reviewed after no more than three years.
The Tariff Methodology is strictly licence-based, implying that revenue requirements are determined on a MYP basis per license, and then aggregated or passed through to further licensees or structures to determine end-consumer tariffs.
Revenue reconciliation is an integral part of the tariff methodology throughout the value chain, tied into the tariff review process.
PERFORMANCE DRIVERS
The Tariff Methodology is linked to the Performance Management System through the Performance Management Framework (PMF) assessment result determining the portion of discretionary cost pass-through allowed in the revenue reconciliation process for licensees. The performance drivers used in the tariff methodology also align with the PMF, however, operate at a different focus than provided for in the PMF.
The determination of tariff charges is lightly regulated by providing guidance on the allocation of approved costs and the formulation thereof in individual charges for connection categories. Licensees have flexibility to propose their tariffs within this framework as is appropriate for their customer base.
The update and review of the Economic Rules, Net Metering Rules, and Tariff Methodology was guided by four key principles:
- Ensuring financial and technical sustainability of the ESI
- Ensuring affordability of electricity for social and economic development
- Linking tariffs to efficient, reliable, and high-quality service delivery, and
- Upholding a fair, transparent, and predictable regulatory process.
In addition, the Economic Rules aim to establish the overarching framework for a competitive, efficient, and sustainable electricity industry. They seek to balance cost-reflective tariffs that ensure licensee viability with the imperative of affordability and consumer protection.
Net Metering Rules introduce complementary objectives to empower consumers through self-generation and reduce grid reliance, promote renewables, and deliver socio-economic benefits.
Net metering is a process that allows residential and commercial customers who generate their own electricity from solar power to ‘bank’ or ‘store’ their electricity in times of overproduction in the distribution grid (e.g. for solar energy during peak production in the day), and to balance out their grid consumption with the banked or stored electricity during times when their systems are not producing (i.e. during evening hours), thus netting their consumption from the grid with their own production.
NOT EXCEED 500 KVA
Under the new rules, the installed generation capacity of each net metered facility must not exceed the main electricity supply circuit breaker current rating converted to the kVA of the facility and shall not exceed 500 kVA.
“Small renewable in-feed customer” describes small-scale in-feed generator that generates electricity from renewable energy sources and for the purposes of these rules is limited to a generating capacity 13.8 kVA for single phase connection at the standard low voltage in the licensed area of a distribution licensee.
“Third-party ownership” means a model for financing and operating a net metered facility where the legal owner of the facility is an entity separate from the customer that consumes the generated electricity, and is used to enable the customer to access renewable energy without direct capital investment, system maintenance, or ownership responsibilities.
All renewable energy technologies may be used for Net Metering purposes, including but not limited to facilities for the production of electrical energy that uses solar, wind, water, geothermal, biomass, biogas, biofuel, or fuel cell resources. All distribution consumers are allowed to install net metered facilities at their own cost subject to the Act, the new rules and other rules, regulations code, and standards under the Act.
The ECB maintains that together, these instruments form a coherent strategy to steer Namibia’s ESI toward greater resilience, sustainability, and fairness for all stakeholders.
In this regard, Kahimise said it was imperative for the key stakeholders to scrutinise and validate the integrated drafts, to ensure that they were robust, practical, and aligned with our shared vision.
