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<abstract> <p>Sustainable electricity supply plays a key role in economic development. Cost recovery, profitability and affordability of electricity through power tariff regulation, have become a subject of conflict between private providers and regulators. Consequently, regulators need to balance the interests of all stakeholders. The objective of this study, is to measure to which extent, Electricity Net Consumption (EC), Electricity Net Generation (EG), electricity transmission and distribution losses (Losses), International Average Crude oil prices (FP), Consumer Price Index (CPI), Industry Value Added (IVA) could influence the Average Electricity Prices (EP) in East Africa, especially in Rwanda, Uganda, Tanzania, Burundi, and Kenya. The data are from World Bank Indicators and cover the period from 2000 to 2019. This study adopts a three-stage approach, consisting of panel unit root tests, panel cointegration tests and estimating the long run cointegration relationship of the variables in a panel context. We applied four different panel unit root tests including ADF-Fisher Chi-square, Levin, Lin and Chu (LLC); PP-Fisher Chi-square, and Im, Pesaran, and Shin, (IPS). The results reveal that the variables are non-stationary at "level", stationary at first-differences and integrated with order one denoted as I(1). The Pedroni, Kao and Johansen Fisher co-integration tests were performed. This study uses full modified ordinary least squares (FMOLS) and dynamic ordinary least squares (DOLS) to estimate the long run relationship among the variables. We find that the increase in EG, FP, and CPI increase the Average Electricity Prices (EP); while the increase in Losses, EC, and IVA decreases EP. Therefore, we recommend the promotion of long-term investment policies in renewable sources and efficient policies to reduce technical and commercial losses. In addition, this study suggests that appropriate policies related to subsidized electricity prices would, however, prevent adverse effects related to inefficient over-consumption of electricity.</p> </abstract>

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This paper presents a comparative analysis between the theoretical concepts of tariffs design methodologies and tariff design practices in developing countries especially in East African countries including Rwanda, Tanzania, Uganda and Kenya. The theoretical concepts impose regulatory principles to be followed by the utilities for a fair and efficient tariff. A well-defined and appropriate tariff structure must balance the financial sustainability of the sector on the one hand and the well-being of various segments of society on the other. Even if utilities in regulated markets, especially in East African Countries are currently supposed to apply dynamic pricing models, their governments are still providing significant subsidies and this can create operational inefficiencies. In addition, inappropriate dynamic pricing models can lead to cross subsidization between customers which violate the equity or non-discrimination principle of a good tariff which discourages use by the overcharged and promotes overconsumption by the subsidized. The work presented in this paper evaluate the performance of different methodologies used by developing countries to set electricity prices against the theoretical concepts of electricity dynamic pricing. It also highlights the opportunities and challenges to be addressed in order to set efficient and appropriate tariffs. The conclusion and policy recommendations are provided.

This paper is based on a research study which was carried out, to empirically assess the impact of power sector reforms, comprising privatization, competition and regulatory reforms in 29 African countries, for the period 1988–2005. The list of countries in the research sample is shown in Appendix 1. The main findings for the generation sector is that, in Africa, though energy sector regulation backed by sector law can bring about favorable outcomes, better results are likely to be achieved if the regulatory agency has been in existence for at least 3 years, and it co-exists with either competition ‘for’ the market or private sector participation. On private sector participation, the presence of Independent Power Producers, management contracts and private shareholding in generation assets, can enhance generation sector performance. The results on the transmission system seem to indicate that though the establishment of a regulatory agency can reduce transmission system loss level, this outcome is likely to be achieved if the regulatory agency has been existence for at least 3 years. On distribution system loss, it emerged that the sole existence of a regulatory agency may not be enough to influence a downward trend in distribution system loss level, unless the market, permits the co-existence of competition ‘for’ the market, with a regulatory agency.