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CPCS helps Ethiopia evolve its electricity tariff structure

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CPCS is spearheading a comprehensive tariff revision in a bid to help Ethiopia reach its goal of connecting more than 15 million households to electricity over a 10-year period.

 

Sector: Energy

Client: Ethiopian Electric Power and Ethiopian Electric Utility

Client type: State government

Location: Ethiopia

Project type: Technical assistance for tariff study

Advisory services: Financial analysis, market analysis

 

 

Assignment:

CPCS is assisting Ethiopia Electric Power (EEP) and Ethiopia Electric Utility (EEU) in conducting a tariff revision, preparing tariff proposals for submission to the Ethiopian Energy Authority (EEA).

The EEP and the EEU manage and operate the electricity services industry in Ethiopia. They’re preparing the revenue requirement and multi-year tariff application for the next multi-year electricity tariffs period.

The challenge: Ensuring that the new tariff proposal is financially viable for both entities, but also for the sustainability and growth of the overall electricity sector in Ethiopia including generation, transmission, distribution, and sale in sub-sectors.

Services provided:

  • Determining annual revenue requirement and procedures for periodic adjustment.

  • Developing a sector-wide financial model to enable planning at the utility level.

  • Proposing recommendations to improve existing tariff structure.

  • Proposing recommendations to establish a new wholesale electricity tariff structure between EEP and EEU.

  • Supporting EEP and EEU in fulfilling regulatory requirements for new tariff system.

Zoom out: EEP undertakes the feasibility studies, design and construction, and operation of electricity generation stations, transmission lines, and substation facilities in Ethiopia. EEP is also responsible for electricity trade with the neighboring countries. EEU is responsible for electricity distribution and sale to end consumers, which include industries, businesses, and households in the country. Both sector utilities are critical to the sustainability and growth of the overall electricity sector in Ethiopia.

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