Chapter (2) Electricity in Egypt

Electric utility tariff structures in Egypt

Electricity tariff structures in Egypt are fairly complex, especially for large
industrial users. Electricity tariffs are designed to recover the cost to the utility
of both providing and operating the equipment to generate and deliver the
electricity. The charges levied by the utility to recover the capital costs are
generally built into the charges for peak demand and power factor.

Demand (kW) is a measure of the rate of energy consumption. The higher the
demand, the more electricity generating capacity required to supply that
demand. Demand is measured in the unit of watts. Consumption is measured in
kilowatt-hours and can be considered to be the integral of the instantaneous
demand over time.

Demand charges are generally based on either an actual measured peak demand
or a contracted peak demand. The utility must provide the generating,
transmission and distribution equipment capacity to provide a user's peak
electric demand even if that maximum electric demand occurs for only a short
period of time. Hence, the consumer can incur substantial costs for a short
duration of high electricity demand.

In addition, since the demand charges are based on the higher of contract peak
demand or actual measured peak demand, the consumer who contracts for a
significantly higher peak demand than actually required will also incur
significantly higher electricity costs.

Residential Tariff Structures

Charges for residential electricity consumption are easy to compute. The
residential tariff is based strictly on consumption. The tariff consists of a number

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 of rate blocks; discrete levels of consumption during which different unit
charges for electricity apply. In the case of the residential tariff, there are a total
of 6 rate blocks. The tariff is designed and the charges are based on total
monthly electricity consumption. The tariff is shown in the table below (power
factor is assumed 0.9).
(a) Residential Tariff Structure for houses (7/ 2019)

Monthly Electricity Consumption Cost per kWh

First 50 kWh (0 to 50 kWh) LE 0.30 (15 L.E max)

Next 50 kWh (51 to 100 kWh) LE 0.40 (20 L.E max)

First 200 kWh (0 to 200 kWh) LE 0.50 (100 L.E max)

Next 150 kWh (201 to 350 kWh) LE 0.82 (123 L.E max)

Next 300 kWh (351 to 650 kWh) LE 1.00 (300 L.E max)

Next 350 kWh (650 to 1000 kWh) LE 1.40 (490 L.E max)
From 0 to more than 1000 kWh LE 1.45

(b) Residential Tariff Structure for commercial shops (7/ 2019)

Monthly Electricity Consumption Cost per kWh

First 100 kWh (0 to 100 kWh) LE 0.65

First 250 kWh (0 to 250 kWh) LE 1.15

First 600 kWh kWh (0 to 600 kWh) LE 1.40

Next 400 kWh (601 to 1000 kWh) LE 1.55

From 0 to more than 1000 kWh LE 1.60

Street lighting and traffic signs LE 1.05

• The residential rate structure is a "progressive" tariff. The higher the

consumption, the higher the unit cost per kilowatt-hour.

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Small Industrial Tariff Structures
Small industrial tariff structures are applied to consumers with less than 500 kW
connected load. There are two separate tariff structures for consumers falling
into this category. The small industrial tariff includes private sector industrial,
agricultural, land reclamation, and other customers. The structure is shown in
the tables below:

Small Industrial Electricity Tariff (Less than 500 kW)

Private Sector Industrial, Agricultural and Land Reclamation Customers
Annual Electricity Consumption Cost Per kWh
First 70,000 kWh (o to 70,000 kWh) LE 0.0737
Next 100,000 kWh (70,001 to 170,000 kWh) LE 0.0602
Additional kWh (over 170,000 kWh) LE 0.0573
Small Industrial Electricity Tariff (Less than 500 kW):
All Other Customers
Annual Electricity Consumption Cost Per kWh
First 70,000 kWh (0 to 70,000 kWh) LE 0. 1694
Next 100,000 kWh (70,001 to 170,000 kWh) LE 0. 1385
Additional kWh (over 170,000 kWh) LE 0.1319

The small industrial tariffs are based only on electricity consumption (kWh),
similar to the residential tariff structure, and there is no explicit charge for peak
demand. This tariff is also broken in to a number of discrete rate blocks. There
are a number of differences between both tariffs. First, the number of rate blocks
in the small industrial tariff is much reduced, compared to the residential tariff.
Second, the small industrial tariff is not a progressive tariff structure: as the
amount of consumption increases, the average cost for a kilowatt-hour of
electricity will decrease. Finally, the small industrial tariff structure is based on
annual consumption, not monthly consumption, as is the residential rate.

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Large Industrial Customers
The tariff applied to large industrial customers (demand equal to or larger than
500 kW) is the most complex of the utility rate structures. Actually, two separate
rate structures are applied to this class of customers: a rate for lighting service
and a rate for motive power.

Industrial Lighting Service

The rate for industrial lighting service is similar to those for small industrial use:
charges are based on kilowatt-hour consumption only, with no explicit demand
charge. However, unlike the small industrial rate, which is regressive (the
greater the consumption the lower the rate), the lighting tariff is progressive (the
greater the consumption, the higher the rate). Again the rate is split into a
number of rate blocks.
Annual Electricity Consumption Cost Per kWh
First 100 kWh (0 to 100 kWh) LE 0.034
Next 100 kWh (101 to 200 kWh) LE 0.054
Next 150 kWh (201 to 350 kWh) LE 0.088
Next 150 kWh (351 to 500 kWh) LE 0.110
Next 500 kWh (501 to 1000 kWh) LE 0.130
Next 1000 kWh (1001 to 2000 kWh) LE 0.155
Next 2000 kWh (2001 to 4000 kWh) LE 0.165
Additional kWh (over 4000 kWh) LE 0.180

Industrial Motive Power Tariff

The large industrial motive power tariff applies to three major classes of
customers: public sector industries, national private sector industries, investment
sector companies. Tariff is based on three elements: a demand charge, a
consumption charge, and a power factor charge.

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a) Annual Demand Charge
Electric demand charge is based on the highest of one of these three demands:
the contracted power in kW; the contracted power in kVA times 0.9; or the
actual recorded power in kW. The annual cost per kW of demand is a fixed
value ( say LE 82.1). Hence, the highest of the three demands times LE 82.1
yields the annual demand charge.
b) Annual Consumption Charge
The consumption charge is based on annual kilowatt-hours of electricity used,
but the tariff is set up into a "floating rate block structure. The number of
kilowatt-hours in each rate block depends on the contract demand of the
consumer. The consumption tariff schedule is illustrated in the table below.
Annual Electricity Consumption Cost Per kWh
First 1000 hours times demand LE 0.1471
Next 500 hours times demand LE 0.1384
Next 1000 hours times demand LE 0.1207
Next 1000 hours times demand LE 0.1037
Next 1500 hours times demand LE 0.0788
Additional kWh LE 0.0673

In the tariff structure above, the demand used is again the highest of the
contracted power in kW; the contracted power in kVA times 0.9; or the actual
recorded power in kW.
Impact of Contract Demand on Annual Consumption and Demand Charges
Both the demand charge and the consumption charge are heavily dependent on
the billing demand. If the billing demand is very much in excess of the actual
measured peak demand, it is possible that the demand and consumption charges
are excessively high. This is often the case in Egypt, where the contract demand
is negotiated with a mind towards future facility expansion. A renegotiation of

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contract demand to a level closer to actual maximum demand can result in
substantial savings.
c) Annual Power Factor Penalty
This penalty is applied when the measured power factor is less than 0.9, and is
based on the kilowatt-hour consumption and average cost per kilowatt-hour.
Poor power factor can be easily increased to 0.90 or above, thereby eliminating
the annual power factor penalty charge. The power factor penalty depends on
how much the measured power factor is below 0.9. When the power factor is
less than 0.9 but higher than 0.6, the penalty is computed according to the
following formula:
Penalty = [(0.9 - P.F.)/2] X yearly kWh X avg LE/kWh
When the power factor is equal to or less than 0.6 but greater than 0.4, the
penalty is effectively doubled and computed according to the following formula:
Penalty = [0.9 - P.F.] X yearly kWh X avg LE/kWh
When the power factor is 0.4 or less, the electricity distribution authority can
refuse to provide electric service to the consumer.
d) Fuel Adjustment Charge
For private and investment sector companies, a fuel adjustment charge is added
monthly to the bill. This charge is a fixed rate per kWh of consumption. Its
primary purpose is to compensate for differences in the quantities and the prices
of petroleum fuels that are used for electricity generation. Unfortunately, the
fuel adjustment charge cannot be known in advance, and therefore cannot be
used accurately in budgeting energy costs or calculating paybacks of energy-
savings measures. It can vary from month to month, and has been quite
significant in the past.