In an effort to attract more customers and increase revenue, Electricite du Cambodge has offered reduced rates for industrial users and hotels.
In some instances, the more power a business uses, the less it will pay per unit.
The new plan calls for four different rates for each category of commercial and industrial users, and hotels based on the usage of electric power. “In our new tariffs, the more customers use power, the cheaper the rates,” said Ty Norin, EdC’s executive director in corporate planning and projects. “We want to attract more customers to switch to EdC.”
The highest rates remain 650 riel ($0.17) per kilowatt hour for commercial and industrial customers, and 800 riel ($0.21) per kilowatt hour for hotels. But some will pay as little as 500 riel ($0.13) for commercial usage and 600 riel ($0.16) for hotels, according to their consumption.
The new structure was set in early August, six months after the government created two new categories—commercial users and government institutions—departing from the domestic user category that was charged a flat 350 riel per kilowatt hour.
At that time, those in the commercial and industrial category bore an 86 percent increase in the rate. The government also faced a high increase. Now the state-owned utility is making an effort to reduce rates to promote EdC in these prospective markets.
“The two categories are high in potential growth,” Ty Norin said, noting that only 20 percent of the all customers fall into the commercial or industrial categories.
About 52 percent of the total consumption comes from local residents, who have been charged 350 riel (equal to $0.13 in 1995, presently equal to $0.09) per kilowatt hour since 1995. To increase revenue for the cash-strapped utility, EdC needs to up the number of customers in high rates categories, he said.
According to the new tariffs, commercial and industrial users now have off-peak rates between midnight to 6 pm, and high volume users get discounted rate. Rates decrease from the normal $0.17 per kilowatt hour for the users with monthly consumption of less than 45,000 kilowatt hour to $0.15 for users with up to 80,000 kilowatt hour, $0.14 for users with up to 130,000 kilowatt hour and $0.13 for users with more than 130,000 kilowatt hours. For hotels, rates are set at $0.21, $0.19, $0.18 and $0.16 in each usage category.
However, the new structured rates do not satisfy the World Bank recommendations. The bank’s power-sector strategy issued in June mandates tariffs should take into account the voltage-level connection. The tariffs also should be attractive for those who generate their own power.
Roger Tan, general-secretary for the Garment Manufacturers Association of Cambodia, said reducing the rates is not good enough to attract manufacturers, many of whom rely on their own electricity, usually from generators or those who undersell the EdC.
“We can’t rely on power that is shut down for three or four hours at a time even if it is cheaper,” he said. “If they can keep the price down and give us reliable power, many would go to EdC.”
Five-star hotels are also skeptical that any large hotels would be interested in switching to EdC power. “We can not afford it at that high rate,” said Gerard Verhoeven, general manager for Hotel Inter-Continental.