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Friday ,November 21st, 2008 |
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Licencing |
| Licencing |
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| Economic
regulation of the
electricity sector is meant to benefit all
stakeholders |
The
LEA Act requires all persons generating, transmitting,
distributing or supplying electricity to do so
under the authority of a licence granted by the
Lesotho Electricity Authority (LEA). The licences
contain conditions, which allow the LEA to regulate
the licensee’s electricity business effectively
and efficiently to benefit electricity customers
generally.
The
way in which the LEA regulates is through the
issue and modification of licences.
The LEA Act provides that no person may undertake
a regulated activity without being in possession
of a licence issued by the LEA. It is an offence
to conduct a regulated activity without a licence.
Provision is made in the LEA Act for certain exemptions
from the licensing requirements. The ‘base
criteria’ for the granting of a licence
is that the LEA must be satisfied that the prospective
licensee has an appropriate financial standing,
technical and managerial competence. The licences
contain various conditions relating to electricity
tariffs and prices, electrification commitments
and quality of supply and service standards. Licences
may not be transferred without the approval of
the LEA.
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Licences
Composite licence
The
Composite Licence issued to the LEC authorizes
it to conduct its core business. The core business
of LEC is defined to be the transmission, distribution
and supply business. The LEC is exempt from the
requirement to hold a generation licence because
the capacity of its generating stations falls
below the required threshold limit of 2 MW.
The
LEC must execute its business in a designated
service territory. This is defined to be an area
which extends 3,5 km beyond LEC's existing distribution
system. This is the area within which it has exclusivity.
Its authorized supply area is defined to be the
whole of Lesotho i.e. LEC can supply in any area
subject to the approval of the LEA.
LEC
is also appointed as 'Power Procurement Manager',
which means that it is responsible for buying
electricity in bulk in a competitive manner and
selling to end consumers in Lesotho. The LEC Licence
provides that LEC must first purchase as much
as is possible of the electricity Lesotho requires
from 'Muela before purchasing electricity from
any other source. This is in the national interest
and would prevent 'Muela from becoming stranded
if a cheaper source is identified elsewhere.
Generation
licence
The
Generation Licence grants the Lesotho Highlands
Development Authority (LHDA) the right to operate
the 'Muela Hydropower Station. The station's output
must be sold to LEC, i.e, LHDA cannot sell electricity
to anyone but LEC and LEC is obliged to take 'Muela's
full output at all times. The tariff arrangements
are dealt with in terms of a Power Sales Agreement
(PSA) between LHDA and LEC.
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