From the 1st of August this year ZESA introduced what they call stepped tariffs. They said the new framework is set to reward people who consume low power whilst somehow punishing high power consumers. I wrote an article in which I tried to unpack the framework for the benefit of readers like you. Notice I say that ‘I tried’ because at the time I could not make full sense of what the stepped tariffs really meant. In that article, I said ‘Obviously not all customers will easily comprehend this whole framework’. It turned out that most people were having the same experience and even now many still do not understand the new framework. The focus of this article is break down this new stepped tariff framework in a clearer and easy to understand manner.
A Passing Note On The Power Of Video Content
If you read my articles you can attest to the fact that I usually talk about the importance of using visual content online. By visual content, I mean content made from images and videos. There is overwhelming evidence of the widespread preference for visual content online. People prefer such content because it is alluring, engaging and often easy to understand. It is quite apparent that when ZESA initially announced their new tariffs framework the majority struggled to understand it. Recently the Zimbabwe Electricity Transmission and Distribution Company (ZETDC) then resolved to come up with an animated video explaining the framework of the new tariff. They uploaded a portion of it on their Twitter page and uploaded the full video clip on YouTube. True to the power of visual content the video clip has removed the veil that was covering people’s eyes of understanding. I can guarantee you that you will experience exactly that once you watch it. Anyways, let me break down the contents of the video clip for you:
The Stepped Tariffs Framework Simplified
Before this new framework, a flat rate of ZWL$0.27 per kWh was being used. This was regardless of whether you consumed little or high quantities of power. The new tariff structure stipulates that whether it is the first or end of the month (as long as it is your first time purchasing electricity for that month) the rate for the first 50 kWh will be ZWL$0.06. This is what they call the lifeline tariff specially designed for the less privileged members of society. Ideally, it is to ensure that everyone gets to afford at least some power as opposed to none at all. The 50 kWh are on average enough to power a two-plate stove and electric bulbs for a month. For the next 51 kWh to 200 kWh the rate becomes ZWL$0.30 per kWh and for the next 201 kWh to 500 kWh the rate becomes ZWL$0.40 per kWh. To put all this into perspective let us look at 3 scenarios as follows: (take note – a unit is the same as a kWh)
Household A – Uses 50 Units A Month
Under the old tariff structure of a ZWL$0.27 flat-rate, this household would pay ZWL$13.50 for 50 units. Under the new stepped tariffs structure, this household now pays ZWL$3. Thus 78% on spending is saved in this scenario.
Household B – Uses 200 Units A Month
Under the old tariff structure of a ZWL$0.27 flat-rate, this household would pay ZWL$54 for 200 units. Now, this household pays ZWL$48 for the same quantity of units constituting an 11% saving on spending. Let us break down how we arrive at the ZWL$48 amount – the first 50 units (at ZWL$0.06) gives us ZWL$3. The remaining 150 units (at ZWL$0.30) gives us ZWL$45. Add the two and you get ZWL$48.
Household C – Uses 500 Units A Month
Under the old tariff structure, this household was paying ZWL$135 for 500 units. Owing to the new stepped tariffs structure this household now has to pay ZWL$168 for the 500 units. To calculate you simply use rates of ZWL$0.06, ZWL$0.30 and ZWL$0.40 for 50 units, 150 units and 300 units respectively. For this scenario, your spending actually increases by 24%.
So the principle here is that the conservative and more careful users will pay less whilst the heavy consumers will pay a premium rate. I am confident this is now clearer for everyone to understand. It would be great to hear your comments on this new tariffs structure, kindly comment below.