Frequently Asked Questions

Index

1) What is a Regional Electricity Distributor (RED) - go there
2) Whose initiative is the REDs? - go there
3) Why REDs? - go there
4) What is Erongo Red? - go there
5) Who leads Erongo RED? - go there
6) Erongo RED’s cut-off date on the 7th of each month in Walvis Bay is adversely affecting pensioners getting paid on the 7th and sea going workers. Why are customers cut off even if the outstanding balance is N$8? Why is only one postponement allowed per year, rather than considering individual cases? - go there
7) Erongo RED requires deposits (when consumers defaulted) in addition to reconnection fees. Why can Erongo RED not allow reasonable instalments on deposits or debts for all customers? - go there
8) Various complaints have been received regarding wrong metering and inaccurate monthly estimates which consumers must pay or face being cut off. What is Erongo RED’s position on this? - go there
9) Complaints were received regarding poor customer service due to inexperienced or uninformed frontline staff. - go there
10) Prepayment meters will especially be beneficial to the poorer communities since it will allow them to manage their electricity more efficiently. When will Erongo RED implement pre-payment meters and which customers will qualify for such meters? Also, what are the cost implications thereof? - go there
11) What will Erongo RED do to improve its image in the community and ensure better access for customers’ queries/complaints to reach the correct Erongo RED officials? - go there
12) What causes the huge difference in the following example? A 40 amp circuit breaker costing N$163.76 (Swakopmund) and N$79.25 (Walvis Bay); and why did Erongo RED further allow 14.8% increase for Swakopmund and 11.1% increase for Walvis Bay, which is not in line with the harmonization of these 2 tariffs? - go there
13) What should one do when becoming aware of a problem with unacceptable low voltages recorded in the system which could result in damage to electronic equipment? - go there
14) When will electricity be provided to TuliNawa in Swakopmund? - go there
15) Why have electricity prices increased so much since Erongo RED started? - go there
16) Is it true that Erongo RED made losses of N$14million? And if so, why? - go there
17) There is a perception amongst consumers that the salaries of Erongo RED staff are too high resulting in electricity prices to increase. Can Erongo RED please respond? - go there
18) The decrease in LA Surcharges to Municipalities has lead to the increase of other municipal services especially rates & taxes. - go there
19) Why must Erongo RED’s customers subsidise struggling LAs? - go there
20) Why is NamPower a shareholder in Erongo RED while it sells electricity to Erongo RED making a separate ompany profit of N$120 million? - go there
21) What are the steps to be taken in order to ensure sufficient electricity supply in the future and will private sector participation be allowed? - go there
22) Is it a legal requirement for LAs to join REDs? - go there
23) What is the progress on rural electrification in the Erongo Region? There are still many places in the dark. - go there
24) The REDs set out to supply and distribute electricity in a more efficient manner to ultimately benefit end users. Can you honestly say this has been achieved at Erongo RED? - go there
25) Do you experience problems with the non-payment of accounts, which was a major problem for the smaller municipalities in the past? - go there

1) What is a Regional Electricity Distributor (RED)
A RED is a legal entity, which is tasked with the supply and distribution of electricity in a dedicated region, combining the electricity distribution and supply departments of the Local Authorities, Regional Councils and NamPower.

2) Whose initiative is the REDs?
Within the context of the Government’s National Development Plan, the Ministry of Mines and Energy has formulated an Energy Policy White Paper, which amongst others, provides for re- organization of the electricity distribution industry through the formation of REDs as a means of improving service delivery and efficiency in the electricity sector.

3) Why REDs?
Through the formation of REDs, the supply and distribution of electricity will be done in a more efficient manner, which will ultimately benefit the end users.

4) What is Erongo Red?
In line with the above- mentioned policy a company called Erongo Regional Electricity Distributor Company (PTY) Ltd (Erongo RED) has been established to undertake the supply and distribution of electricity in the Erongo Region.

The following are shareholders in the Erongo RED:

Municipality of Walvis Bay
Municipality of Swakopmund
NamPower Distribution
Arandis Town Council
Usakos Municipality
Omaruru Municipality
Uis Village Council
Erongo Regional Council
Henties Bay Municipality
Karibib Municipality

5) Who leads Erongo RED?
The Board of Directors and the Chief Executive Officer lead the Erongo RED. The current Vice-Chairperson of the Board is Mr. I.G Goseb and the Chief Executive Officer is Mr. G. Coeln.

6) Erongo RED’s cut-off date on the 7th of each month in Walvis Bay is adversely affecting pensioners getting paid on the 7th and sea going workers. Why are customers cut off even if the outstanding balance is N$8? Why is only one postponement allowed per year, rather than considering individual cases?
The due date for electricity accounts for Walvis Bay customers was always the 7th of the month and Erongo RED has continued with the existing practice. The important point to note is that customer that cannot pay the account by the due date should contact Erongo RED by that date and make arrangements. Only customers that owe N$ 100-00 or more are due to be cut off and if there was a cut off for an outstanding amount of less than N$100-00 then this needs to be reported and the error corrected immediately. It is unfortunately not possible for Erongo RED to make different arrangements several times a year as we also have to pay our suppliers such as NamPower, local authorities [Surcharges] and others and we cannot make changes with them several times a year.

7) Erongo RED requires deposits (when consumers defaulted) in addition to reconnection fees. Why can Erongo RED not allow reasonable instalments on deposits or debts for all customers?
It is a common practice that the customer is required to pay a deposit with Erongo RED as well as the municipalities. This deposit is an amount equal to the estimated charge of not more than two average months’ consumption of electricity as determined by Erongo RED. A customer that has gone into arrears and is not in a position to pay the full amount of the outstanding account plus deposit can make an arrangement at the pay point of Erongo RED. This arrangement allows for a 50% upfront payment and the remainder over a maximum of three months. Erongo RED has up to now taken the approach that only deposits of defaulting customers needed to be updated so as not to upset the paying customers.

8) Various complaints have been received regarding wrong metering and inaccurate monthly estimates which consumers must pay or face being cut off. What is Erongo RED’s position on this?
Erongo RED has taken over all electricity accounts from the Local Authorities, Regional Council and NamPower and it can happen that errors occur during this process. We apologise for any inconvenience that has been caused by errors, but assure all our customers that we are working hard to have all errors identified and corrected.

9) Complaints were received regarding poor customer service due to inexperienced or uninformed frontline staff.
When we started to operate we asked the authorities that had previously done the revenue management services plus /Ai//gams Networks (Pty) Ltd, to continue doing the revenue management services. This allowed us to get our financial systems going, recruit and train our own staff to take over these services. Unfortunately no experienced people were available in the market and new recruits had to be trained before customer service could improve. Erongo RED would like to assure their customers that the company is taking customer service very seriously and will continue recruiting and training staff until such service is excellent.

10) Prepayment meters will especially be beneficial to the poorer communities since it will allow them to manage their electricity more efficiently. When will Erongo RED implement pre-payment meters and which customers will qualify for such meters? Also, what are the cost implications thereof?
To ensure proper management in the provision of electricity for prepayment service Erongo RED needed to implement a centralised vending system. This will allow customers to vend at any available point of sale in the Erongo Region. To this end a tender for the provision of a centralised vending system was advertised and awarded. A second tender for the provision of STS compliant prepayment meters was advertised and awarded. The centralised system has now been installed and Erongo RED is ready to install new meters for new applicants. Erongo RED has also taken over the various existing prepayment systems used in the past for the provision of prepayment electricity. Until these systems have been harmonised over the next year in order for the same rules to apply throughout the Erongo Region, the existing rules for applying for pre-payment meters will remain. All existing non-STS prepayment meters will be replaced by Erongo RED at no cost to the customer. New applications will have to pay Erongo RED’s standard fee.

11) What will Erongo RED do to improve its image in the community and ensure better access for customers’ queries/complaints to reach the correct Erongo RED officials?
Erongo RED has commenced on an organisational review and audit of its activities. Additional training has already been given to staff and the number of account queries has been reduced drastically. The organisational changes being implemented are focussed at enhancing customer service.

12) What causes the huge difference in the following example? A 40 amp circuit breaker costing N$163.76 (Swakopmund) and N$79.25 (Walvis Bay); and why did Erongo RED further allow 14.8% increase for Swakopmund and 11.1% increase for Walvis Bay, which is not in line with the harmonization of these 2 tariffs?
The difference in the basic charges existed when Erongo RED started to operate. In fact we inherited 10 different electricity tariff structures and are in the process of harmonising these. We want to harmonise these tariffs and move towards a cost reflective tariff as soon as possible. Revenue is derived from the basic charge as well as from the consumption charge. Eventually tariffs will have to be cost reflective. The 14.8% increase for Swakopmund is an overall average of the increases in basic (Amp) charges and energy charges, similar for Walvis Bay. Individual increases for basic and energy charges will be different. Unfortunately, at this stage, we cannot fairly compare the overall increase percentages of the different towns until all tariffs have reached cost reflectivity.

13) What should one do when becoming aware of a problem with unacceptable low voltages recorded in the system which could result in damage to electronic equipment?
When a customer becomes aware of any under- or over-voltages that could damage any equipment in the house, it must be reported as soon as possible to the technical section of Erongo RED, who will endeavour to investigate, identify and rectify the error as soon as possible. Erongo RED is however not liable for any loss or damage, direct or consequential, suffered by the customer or the owner of the customer premises as a result of or arising from the cessation, interruption, discontinuation, deficiency, variation or abnormality of the supply of electricity from whatever cause and whether or not such cause is attributable to any act or omission of any employee or agent or Erongo RED if Erongo RED or its employee or agent acted in good faith.

14) When will electricity be provided to TuliNawa in Swakopmund?
Once payment has been received from the municipality for the installation of new prepayment meters these will be installed by Erongo RED. By now these have already been installed. Funding for land developments is provided by the municipality and installed by Erongo RED in the same way as was previously done by the Electricity Department.

15) Why have electricity prices increased so much since Erongo RED started?
The steep increases in electricity prices of NamPower and the commencement of Erongo RED all started in 2005 and it can therefore be understood if customers blame the establishment of the REDs for the high increase in tariffs. The ECB would like to emphasize that the current electricity price increases is not due to the creation of Erongo RED. These increases have been driven by unfavourable bilateral agreements with Eskom, overall regional shortage of electricity supply, expensive own generation of Paratus and Van Eck Power stations, Cabinet decision to accelerate NamPower’s cost reflectivity by 2010/2011, and higher cost of new generation and transmission projects. The above means that even if the electricity distribution and supply were done by local authorities, the average increases could not have been avoided and, in all probability, would have been higher since a local authority does not have the economies of scale as that of a RED.

16) Is it true that Erongo RED made losses of N$14million? And if so, why?
Erongo RED started to trade with a start-up capital of only N$ 10 million and had to source funding from banking institutions for the remainder of the funds needed. Furthermore Erongo RED had to provide NamPower with an N$ 11 million security deposit. It is also normal practice that a company needs to provide for depreciation of its assets and this adds to losses made. No financial assistance was received from government. The first three years we also had to replace much of the old equipment and infrastructure in order to establish proper pay points and technical support throughout the region.

17) There is a perception amongst consumers that the salaries of Erongo RED staff are too high resulting in electricity prices to increase. Can Erongo RED please respond?
The salaries for Erongo RED staff have been compared and are in line with salary surveys that have been conducted by professional organisations in Namibia as well as in South Africa. The salaries are thus not excessive. Staff members who were migrated from the municipalities retained their current salary as they could not be punished with a lesser pay.

18) The decrease in LA Surcharges to Municipalities has lead to the increase of other municipal services especially rates & taxes.
ECB: LA Surcharges have not decreased but have been kept constant to minimise the price increases due to increasing generation costs. The ECB cannot allow the continued exorbitant subsidisation of other services through electricity while Namibia is facing a shortage in power generation. The ECB is of the opinion that more equitable and broader based income sources should be identified for LAs. The current system whereby electricity customers by means of the LA surcharge fund most of the LA’s activities is unsustainable. Therefore, LAs and MRLGH&RD are urged to initiate a formal investigation into the income basis of LAs.

19) Why must Erongo RED’s customers subsidise struggling LAs?
The subsidies to struggling LAs are minimal compared to the overall economic advantages of REDs in the long-run. All Namibians have been subsidising struggling LAs indirectly because Government has been bailing struggling LAs out using the taxpayers’ money. The same counts for Regional Councils.

20) Why is NamPower a shareholder in Erongo RED while it sells electricity to Erongo RED making a separate ompany profit of N$120 million?
The medium-term strategy of Government is that NamPower should withdraw from distribution. However, NamPower has been a distributor to farms and rural areas and has therefore created assets which entitle it to shareholding in RED companies. NamPower has technical experience and a sound financial track record that will be used in the short-term to ensure the success of the RED. All licensees (including NamPower) are allowed regulated returns on their assets which eventually translate into their profits; none of the licensees are allowed to make excessive profits on electricity.

21) What are the steps to be taken in order to ensure sufficient electricity supply in the future and will private sector participation be allowed?
Various steps have been taken, some of which are the already mentioned raising of generation tariffs, the preparation of an Independent Power Producer & Investment Market Framework, Government’s capital injection into NamPower, NamPower’s investment in the Hwange Power Station and a transmission line that links Caprivi and more neighbouring countries to Namibia. The ECB has also issued a couple of conditional generation licenses, all to facilitate and attract new investments in generating and securing future electricity supply.

22) Is it a legal requirement for LAs to join REDs?
There is currently no law which actually “forces” an LA or RC to join a RED. However, it is Government policy which the ECB enforced through inclusion of a license condition in the licenses of all LAs that they should form a RED to increase electricity distribution efficiency. All LAs agreed in an Electricity Strategic Summit in 2003 that REDs will be established.

23) What is the progress on rural electrification in the Erongo Region? There are still many places in the dark.
Rural electrification is a national project that is executed and co-ordinated in conjunction with Erongo RED by the Ministry of Mines & Energy, the Erongo Regional Council as well as NamPower. The project closely follows the steps in the approved rural electrification master plan.

24) The REDs set out to supply and distribute electricity in a more efficient manner to ultimately benefit end users. Can you honestly say this has been achieved at Erongo RED?
We inherited networks as they were and had to make do with what was there. That meant we had to do a lot of first-aid repairs, as most of them were not in a good condition. There will not be change overnight, but over the past 36 months we have added value to the community in the Erongo Region. Karibib, for instance, no longer has voltage problems and the supermarket fridges are no longer breaking or tripping because of fluctuating voltage. We are getting to the bottom of it. The whole town of Usakos used to trip out when three drops of rain fell. We have to get to some kind of standard as there is no money to replace networks, which require capital investments. We would first have to build up capital.
We managed to maintain the standard of Walvis Bay and Swakopmund with reasonably good infrastructure. It took a lot of effort to improve the standard elsewhere in the region. We established a presence in every town to bring a direct service to each town locally. We are also in a position to use the existing knowledge and skills base of the Walvis Bay and Swakopmund Local Authorities to the benefit of the whole region. Another benefit is that we can buy material in bulk for the company, and no longer need to do it separately for every town.
Overall, customers are getting a better deal from us. At Karibib the situation at the Local Authority had worsened to such a state that NamWater had taken over the provision of water to residents. With the establishment of the RED, another problem was taken out of the hands of the Municipality.
The challenges that lie ahead are the large investments required for the bulk supply upgrades of Walvis Bay, Swakopmund, Henties Bay, Usakos and Arandis which are necessary due to the large increase in electricity demand in the region.

25) Do you experience problems with the non-payment of accounts, which was a major problem for the smaller municipalities in the past?
In the beginning we had problems, but our policy of conducting regular public meetings in the region seemed to have made a big difference. We took time to make people understand why they need to pay their accounts. We encouraged customers to bring their accounts of the previous three to six months to help us answer each question and solve their problems. We also took the politicians with us to these meetings to show them we were serious about answering customer questions. In return, customers have seen the benefit, especially when the power stays on when it starts raining.

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