The LEWA 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 (LEWA). The licences contain conditions, which allow the LEWA to regulate the licensee’s electricity business effectively and efficiently to benefit electricity customers generally.
The way in which the LEWA regulates is through the issue and modification of licences. The LEWA Act provides that no person may undertake a regulated activity without being in possession of a licence issued by the LEWA. It is an offence to conduct a regulated activity without a licence. Provision is made in the LEWA Act for certain exemptions from the licensing requirements. The ‘base criteria’ for the granting of a licence is that the LEWA 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 LEWA.
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 LEWA.
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.
WASCO was issued with a Composite Water and Sewerage Services 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.
Lesotho Electricity and Water Authority (LEWA) was established through the Lesotho Electricity Authority (LEA) Act. No. 12 of 2002 as amended. The Authority operates in line with the Government policy on electricity and water supply matters. LEWA is funded through License fees and customer levies.
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