Electricity Regulation in Uganda: Key Changes in the Electricity (Amendment) Act 2022
In May 2022, the Electricity (Amendment) Act, 2022 (the Act) of Uganda became a law. Its purpose was to amend specific sections of the Electricity Act Cap 145 due to legal inconsistencies as well as structural and administrative bottlenecks in the sector.
This policy brief aims to identify pertinent Amendment law provisions.
Composition of the board of ERA
Section 5 introduces an eligibility requirement for members of the Board. Each member is required to have a minimum qualification of a university degree. Additionally, the Act incorporates gender representation in the composition of the Authority. At least one third of the members shall be women.
Tenure of office of board members
Section 7 is amended to provide for the different tenures of the five board members. The Chairperson and two members shall hold office for a period of 5 years and two other members for four years. The Act does not specify which members shall hold office for four or five years other than the Chairperson. All members are eligible for reappointment but the Act does not set a limit on the number of tenures a member can serve. The rationale for reappointment and difference in expiry of the tenure is to ensure that there is continuity on the board.
Functions of the Authority
The Act mandates the Authority to prescribe standardized fees in tariffs for renewable energy systems generating up to a maximum capacity of fifty megawatts or other capacity as may be determined, undertake consultancies, research and studies and may advise the Minister on any matter relating to the electricity sector.
Funds of the Authority
Section 22 is amended by increasing the levy imposed on the revenue received from generated electric energy from 0.3% to 0.7%. This will increase the funding to the Authority to strengthen the execution of its mandate by providing more resources.
Authority may invite applications
Section 32 is amended to provide for consultation of the Minister regarding the procedures adopted for the fair, open and competitive process of inviting applications for licenses.
Modification to licencee’s application
Section 44 (8) introduces a time limit within which an aggrieved licencee can exercise his or her right of appeal to the Electricity Disputes Tribunal against a decision of the Authority. The appeal must be instituted 28 days after receipt of the decision of the Authority.
Generation licence
Section 51(1) now mandates a generation licence for anyone constructing, owning or operating a generating station of a capacity of or exceeding 0.5 megawatts. This section also empowers the Authority to determine the capacity of a generating station, which requires the licence. The generating capacity in the country is always increasing as the economy grows which necessitates the need for the Authority to prescribe licences.
Reversion of Hydropower plant
Section 52(3) empowers the Minister to prescribe the procedure for transfer of hydropower plants, installations and property to the government at the expiry of their licenses.
Bulk supplier
Section 56 is amended to empower the Authority to prescribe the terms under which a licensee may supply electricity in bulk to a holder of a distribution licence, transmission licence or directly to a specified class or category of customers. The Act does away with the monopoly of UETCL as the single buyer and supplier of generated electricity. There were areas where UETCL could not reach as it was not economically viable to extend the grid to those areas with low demand. The law currently allows isolated and other power generation plants to sell electricity directly to consumers. This widens electricity penetration.
Rural Electrification Fund
Section 64 abolishes the Rural Electrification Fund and replaces it with the Electricity Development Fund. The Act now widens the focus from rural development to national development of electricity access. This shows government’s commitment to increase electricity penetration and access wider than just in the rural areas.
Tariffs and Terms of Supply
Section 75 (7) empowers the Authority to prescribe the maximum royalties payable by generation licensees of all renewable energy projects. Previously, only hydropower projects paid royalties but this is expanded to include wind, biomass, peat and solar. This is in line with the renewable energy policy of Uganda that provides for all forms of renewable energy.
An application for a distribution licence shall now include a net metering plan for all customer categories. Net metering is an electricity billing mechanism that allows consumers who generate some or all of their own electricity to use it at any time, instead of when it is generated. This allows for distributed sources of power generation but also requires a robust network to ensure stability of the grid.
Offences relating to licenses.
Section 83 increases the fine on conviction for licensees who fail to comply with license terms from one hundred currency points to ten thousand currency points and in the case of continuing contravention, from ten currency points to five hundred currency points.
Offences committed by a body corporate.
Section 83A provides for offences committed by a body corporate. A body corporate and an individual with whose consent or neglect an offence is committed are both liable for prosecution and punishment.
Power of Authority to impose a fine
Section 83B empowers the Authority to impose a fine where it is satisfied that a licensee contravenes any condition of a license or fails to achieve a standard of performance prescribed under the Act. The Authority must give notice to the licensee before imposing the fine and the licensee can make any representations to the Authority. A decision will be communicated within 7 days.
A licensee aggrieved by the decision can appeal to the Tribunal within twenty-eight days of the decision.
Interference with meters, works or public lamp.
Section 85A provides for the offence of Interference with meters, works or public lamp. It explains the acts that constitute the offence and imposes a punishment on one who is liable on conviction to a fine not exceeding fifty thousand currency points or imprisonment not exceeding fifteen years or both.
Theft of Electricity
Section 86A elaborates what acts one must do to commit the offence of theft of electricity. An individual who steals electricity commits an offence and is liable to a fine not exceeding twenty thousand currency points or imprisonment not exceeding ten years or both. Where the electricity abstracted, consumed or used in this provision exceeds 10 kilowatts the convicted person in addition to the penalty imposed shall be liable to pay ten times the cost of the electricity stolen. If it exceeds 10 kilowatts, they shall be liable to pay twenty times the cost of the electricity stolen.
The purpose of this is to deter the theft of electricity and vandalism which increases the cost of electricity thereby making it less affordable for consumers.
General Penalty
Section 89 increases the fine for offences where no penalty is expressly provided for from ten currency points to fifty thousand currency points and incase the offence is continuously committed from one currency point to five hundred currency points. It also increases the penalty beyond a fine to imprisonment not exceeding twelve years.
Establishment of a Tribunal
Section 93 increases the members of the Tribunal from three to seven. It consists of a Chairperson, a Vice Chairperson and five other members. Previously, where one of the three members was indisposed, the Tribunal could not sit. The amendment addresses this problem by increasing the number of members to ensure that quorum is always met.
Termination of appointment of Tribunal members
Section 101 is amended to state that, the Minister is required to consult the Judicial Service Commission in case of removal of Chairperson or Vice Chairperson and consult the Public Service Commission in the case of other members of the Tribunal.
Arrangement of Business
Section 104 provides that the Vice Chairperson shall discharge the functions of the Chairperson where the chairperson is unable to carry out his/her functions or where there is a vacancy in the office of the Chairperson.
Constitution of the Tribunal for exercise for powers
Section 105 empowers the Chairperson to constitute the Tribunal into panels, which can exercise the powers of the Tribunal. The Chairperson also has the power to transfer a case from one panel to another on application by a party.
Independence of the Tribunal
Sections 108A to 108E provides for the Tribunal to be independent of any government entity and manage its own finances.
Decisions of the Tribunal or Panel
Section 111 now provides that the decisions of the Tribunal or the Panel shall be binding if supported by majority of the members.
Procedure of Tribunal
Section 112 includes appointment of any other staff by the Tribunal in consultation with the Public Service Commission for the functioning of the registry.
Immunity of Tribunal members
Section 112A provides for immunity of Tribunal members, both current and former, from any proceedings that may be instituted against them for any acts done in good faith in the discharge of their functions. This ensures independence of decision making without fear of repercussions.
Procedure for dealing with complaints from consumer
Section 118A introduces the procedure by which the licensee may deal with complaints from a consumer. The licensee shall establish procedures for dealing with the complaints and publish the approved procedures in a manner that the Authority may require. This ensures that the Authority or the Tribunal are not burdened with complaints that can be resolved by the licensees thereby reducing bureaucracy in dispute resolution.
Power to make regulation
Section 119 provides for the Authority to consult with the Minister before making regulations and specifically provides for the various provisions that should be in the regulations.
Shareholding of Successor Company and consequential amendment to the Public Enterprises Reform and Divestiture Act
Under Section 125, the power to direct the transfer and allotment of shares in the three successor companies, Uganda Electricity Generation Company Limited, the Uganda Electricity Transmission Company Limited and the Uganda Electricity Distribution Company Limited is no longer the preserve of the Minister but vested in the board of directors and the secretary in cooperation with the Minister.
The Minister in charge of electricity is a shareholder of the successor companies to improve efficiency and management, as opposed to the Minister of Finance.