REGULATION OF THE ELECTRICITY SECTOR

1.  As reported in the Electricity Commission’s Annual Report for 2014-2015 dated 1st September 2015 the Electricity Reset commenced towards the end of 2014 was not completed until the third month of the current reporting year. The outcome of the Reset Process was the setting of the Non-Fuel Component of the Regulated Electricity Tariff at 44.35 seniti per Unit (i.e. per kWh) for the five years of the Second Reset Period which will end on 30th June 2020, subject only to a possible inflation increase each year. Having regard to inflation statistics the Electricity Commission has not approved any inflation adjustment for 2016 to the Non Fuel Tariff, nor during the first half of 2017. Therefore the non-fuel tariff as at 30th June 2017 remains at 44.35 seniti/kWh.
2. On 1st July 2015 the Fuel Component of the Regulated Electricity Tariff was 39.34 seniti
   per Unit (i.e. per kWh). By 30th June 2016 the Fuel Tariff had been reviewed by the Commission on a regular basis and reset downwards to 25.64 seniti per Unit (i.e. per kWh), a decrease during that year of 35 per cent. The total Tariff (Fuel + Non Fuel) as at 30th June 2016 (69.99 seniti/kWh) was at the lowest it had ever been since 2009. The World Price of oil fluctuated quite considerably between July 2016 and June 2017, from a low of 120.96 seniti per litre to as high as 140.81 seniti per litre. Regrettably and inevitable this led to an increase in the fuel component of the fuel tariff, to 41.51 seniti per kWh in the March tariff review. The Standard Tariff thereafter (fuel and non-fuel) was 85.86 seniti per kWh. However that price was paid only by residential customers using more than 100 Units of electricity per month and by non-residential customers. Through the generous intervention of H.M. Government residential customers enjoyed a Lower Lifeline Tariff (fuel and non-fuel) of 70 seniti per Unit for the first 100 Units of consumption – a discount of some 18% on the Standard Tariff!
3. The opportunity was also taken as part of the Reset Process to tighten the Efficiency Standards expected of Tonga Power Limited by the Electricity Commission, for example by (a) setting a new target for Fuel Efficiency which has to be met (or bettered) : and (b) substantially lowering Tonga Power’s allowable Line and System Losses. Tonga’s electricity customers are the true beneficiaries of the current efficiency standards regime which is policed vigorously by the Electricity Commission.
4. The current work programme of the Commission includes : –
   • a continuing review of all non-tariff charges payable by electricity consumers (e.g. Disconnection Charges);
   • options for reducing the electricity tariff to the average Tongan household and small family businesses;
   • enabling electricity consumers to sell to the Grid electricity produced by them, surplus to their requirements
   Generation – and that at a price fair and reasonable both to participating electricity consumers and Tonga Power as operators of the Grid; and
   • developing Rules and Codes of Practice to enhance electrical safety.
   In addition the Electricity Commission will continue to assist the Government of Tonga in its quest to secure 50 per cent Renewable Energy generation by end June 2020.