Economic and Market Regulation

1. Responsibility

The Economic Regulation department is responsible for the effective regulation of the electricity supply industry through the provision of efficient economic
and financial guidelines and advice to the Board and stakeholders.

The department is responsible for the following;

Implementation of the Modified Single Buyer market model, the development of the industry’s tariff systems and methodologies in line with Government
Policies and Legislation.
Review calculate and determination of generation, transmission and distribution tariffs for the electricity industry and approval of revenue requirements.
Evaluates and assesses the impact of the ESI on the economy and the end consumers.
Create an enabling environment for private sector investment in the electricity industry.

2. Activities under department

Implementation and monitoring of the Modified Single Buyer Market Model.
Advice on economic, financial and tariff related matters
Determine the regulated return for utilities
Determine generation, transmission and distribution tariffs by reviewing the submitted revenue requirements for cost effectiveness
Ensures tariffs proposed by licensees are in line with Government Policies and in line with applicable regulations and standards
Make recommendations to Exco, Board and Minister on tariffs matters
Draft guidelines for electricity generation, transmission and distribution tariff setting and review
Monitoring the impact of the electricity supply industry on the economy
Conduct financial and economic reviews for license application and determine applicable tariffs
Monitoring and promoting competition in the industry
Promoting investment in the energy sector
Protection of consumer interests, in terms of affordability and sustainability of electricity services
Address tariff related customer complains
External stakeholder interactions, including RERA (Current Chairperson of Economic Regulation Subcommittee

3. Regulatory Tools

3.1 Rules

3.1.1 Economic Rules

The objects of the Economic Rules are:

to ensure the efficient functioning and development of the electricity industry, efficient electricity provision; and security of electricity provision.
to ensure that electricity tariffs and charges allow licensees a reasonable rate of return in accordance with these Economic Rules and the Board’s tariff methodologies in order to assure that licensees can finance the electricity services and activities of their licensed undertakings.
to establish an environment where the Board can effectively exercise control over, monitor and enforce the economic regulation of electricity.

Economic Rules

3.1.2 MSB Market Rules

The objective:

to set out the rules that will govern bilateral transactions between eligible sellers and contestable customers, under the Modified Single Buyer Market Model

View MSB page
Economic Analysis on the Contestable Customers (2016)

MSB Market Rules

3.1.3 Redistribution and Resale of Electricity

The objects:

to establish a regulated environment within which redistribution of electricity can take place in order to ensure the efficient conveyance and delivery of electricity under exempted circumstances
to ensure that the interests of clients, supplying licensees and other electricity licensees operating in the same area as a redistributor are sufficiently protected as regards pricing, safety and standards on quality of electricity provision and service of electricity so delivered

Resellers Rules

3.1.4 Net Metering Rules

The objects:

the generation of additional power into the national grid, reducing the investment requirements of utilities and conventional independent power producers
to allow customer-generators to reduce their imports from distribution networks through generating for own consumption
to allow customer-generators to export to distribution networks up to the customer-generators' imports from distribution networks
the promotion of sustainable renewable energy sources, small scale investments, value addition and electricity market development

Net Metering Rules

3.2 Frameworks

3.2.1 Wheeling Framework

The main purpose of the Wheeling Framework is to support the operationalisation of the MSB market fair and practical framework for the determination and implementation of wheeling services and charges for the use of transmission and distribution networks.

Wheeling Framework

3.2.2 Balancing Framework

The objective of the Balancing Framework is to recover the cost of providing balancing services from the parties who cause the need for the service in accordance with the ‘user-pay’ principle.

Balancing refers to the real time adjustment of supply and or demand to ensure the security and reliability of the electric system. In Namibia, the Systems Operations (SO) function in NamPower is responsible for balancing. The need for balancing services and the cost to procure these services are the result of unforeseen fluctuations by suppliers and consumers of electricity.

This framework addresses the commercial arrangements in the event an Eligible Generator or Importer deviates from the Final Dispatch Schedule published by the Market Operator.

Balancing Framework

3.3 Policies

3.3.1 Modified Single Buyer Design

The MSB, is intended to intensify competition, provide for more customer choice and increase generation self-sufficiency while lowering the cost of electricity by enabling Bilateral Transactions across Namibia’s integrated electricity system.

Modified Single Buyer Design

3.3.2 National Connection Charge Policy

The overall objective of the National Connection Charge Policy is to establish a standardised approach to dealing with power network connections and associated connection charges.

National Connection Charge Policy

3.4 Mechanisms

3.4.1 Support Mechanism to Improve the Electrification of Households in Urban & Rural Namibia

The support mechanism is to specifically enhance the scope and scale of household electrification efforts in Namibia.
The support mechanism is based on the development of the following three components:

Electrification Support Mechanism

The support mechanism is based on the development of the following three components:

i. National Household Electrification Policy (Draft)

Government Policy that will define objective, approach and targets of the household electrification approach.

National Household Electrification Policy (Draft)

ii. National Electrification Funding Portfolio (Draft)

That will create a common access point and funding platform for utilities (licensees) embarking on additional household electrification projects. Government will be the custodian and significant contributor.

National Electrification Funding Portfolio (Draft)

iii. Household Electrification Master Plan

A single national integrated household electrification plan for Namibia, comprising both rural and peri-urban areas, and thus systematically integrate the approach in which rural and peri-urban areas are electrified.

3.4.2 National Electricity Support Tariff Mechanism

The National Electricity Support Tariff (NEST) was developed the Ministry of Mines and Energy and the Electricity Control Board, and approved by Cabinet, to make basic electricity consumption more affordable through offering a subsidised tariff option on a low circuit breaker rating.

The low circuit breaker rating with the NEST and lower prices charged for the first 200 units are meant to favour households who use electricity mainly for essential uses and provides a buffer against high electricity price increases through a reduction in tariff. www.nest.org.na

National Electricity Support Tariff Mechanism

3.5 Tariff Methodologies

The ECB uses a rate of return (Weighted Average Cost of Capital) tariff methodology for the calculation of tariffs (generation, transmission and distribution) as per recommendations of the National Tariff Study of 2001, detailed methodologies are approved and are currently being used with specific models developed such as; NamPower Application review Model and Operating and Reporting Manual (ORM) for Generation and Transmission and Distribution tariff reviews respectively.

View Tariff page