In January 2020, the Electricity Regulatory Authority (ERA) commenced operationalization of the ‘S’ Factor incentive mechanism which targets to improve the power supply quality and reliability so that electricity consumers have access to quality power supply 24 hours, 7 days a week.
What is the ‘S’ Factor?
The ‘S’ Factor is an incentive-based framework established by ERA where minimum standards of reliability and quality of electricity supply are set for distribution companies.
The implementation of the ‘S’ Factor is provided for under the tariff methodology prescribed in the modified power supply license number 48 issued to Umeme limited.
When was the ‘S’ Factor introduced?
The framework was introduced in December 2018 upon approval of the modification of Umeme Limited’s supply license by ERA.
The Authority approved reliability targets under three parameters including; (1) the System Average Interruption Duration Index (SAIDI), which puts the average duration of power outages at 86.6 hours annually (at least 7 hours per month), (2) System Average Interruption Frequency Index (SAIFI) which limits the frequency of outages to 82.3 times a year (at least 7 times a month), and (3) the Customer Average Interruption Duration Index (CAIDI) limiting the duration each customer should be off supply to 1.05 hours per outage.
Why was the ‘S’ Factor introduced?
The reliability of supply targets under the ‘S’ Factor framework form the basis for evaluating Umeme Limited’s performance.
The targets guide the computation of the reward/ penalty pursuant to the provision of Clause 6, annex A of the distribution and retail supply cost of license number 48.
The overall aim of this incentive mechanism is to improve the power supply quality and reliability and ensure electricity consumers have access to quality power supply 24 hours 7 days a week.
How does it work?
The ‘S’ Factor is computed by comparing the approved/target performance of Umeme Limited with the actual performance in respect of the minimum standards for quality and reliability of power supply, set annually.
What is the electricity consumers’ role?
To report any power supply issues to their respective distribution utility and escalate any persistent supply issues to ERA. However, currently, the S-factor mechanisms only applies to the customers served by Umeme Limited but ERA is in the process of rolling it out to other distribution concessions.