Power regulator to assess impact of higher tariffs on large users

MUSCAT, FEB 18 – The Authority for Electricity Regulations Oman (AER) will conduct a study to assess the impact of Cost Reflective Tariffs (CRT) on industrial, commercial and government customers in the Sultanate, one-year since these subsidy-free electricity rates came into effect early last year. The study, elements of which will be pursued in collaboration with the Ministry of Commerce and Industry, will primarily look at how large consumers of electricity have coped with these new tariffs. It also aims to identify any drive towards energy conservation and management, as well as efficient power utilization that the higher tariffs have helped achieve among these consumer segments.
“Following the completion of a full year from the implementation of Cost-Reflective Tariffs, the study will assess how different categories of consumers (Industrial, Government and Commercial) have responded to the new tariffs. We will also explore possible refinements to the CRT,” said the Authority in its Forward Programme setting out its objectives for the current year.
An estimated 10,000 government, commercial and industrial customers across the Sultanate, identified by electricity authorities as “large” power consumers, are currently subject to Cost Reflective Tariffs (CRT) that came into force on January 1, 2017. It follows a decision by the Council of Ministers to lift longstanding subsidy on power supplied to major customers consuming more than 150 megawatt-hours (MWh) per annum.
The new tariff varies for every hour of the day, thereby providing the targeted government, commercial and industrial customers with strong incentives to reduce overall consumption.
Giving details about the initiative at a recent press briefing, and Abdulwahahab Abdullah al Hinai, Director — Licensing & Legal Affairs, said: “We are working to assess the impact of the new tariffs on these customers, and what measures they have adopted to minimise the impact on their businesses if they are industrial and commercial customers, and establishments where they are government customers.”
The Authority is also collaborating with the Ministry of Commerce and Industry, which is conducting a similar study on the ramifications of the higher tariffs on industrial and commercial consumers in particular.
“We are working together to understand how these customers are adapting to these new tariffs, what measures they have adopted from their side, and from the perspective of the regulator, if there is anything we can do to review some aspect of these tariffs in the future.”
Significantly, some large consumers have embraced measures to alleviate the impact of higher tariffs on their operational costs and corporate bottom lines, said Al Hinai.
“We see some initiatives on the part of industrial, commercial and government customers with regard to energy efficiency, aimed at improving the efficiency of electricity usage within their establishments. Some are also starting to use energy management systems with the goal of mitigating and reducing the impact of the new tariffs,” he added.

Conrad Prabhu