mandate is wide-ranging, it enjoys a high level of independence when it comes to organizational structure and rules, and there are no formal provisions (at least) under which a ministry or other government body can overturn any of its decisions (see the annex).

**Table 8: Formal regulatory governance in Uganda and comparators, 2015**<sup>18</sup>

|**Indicators**|**Kenya**|**Senegal **|**Tanzania **|**Uganda**|**International**<br>**benchmark**|
|---|---|---|---|---|---|
|**Regulatory Governance**|56%|50%|65%|59%|59%|
|**_Accountability_**|95%|70%|95%|74%|83%|
|_Regulatory Oversight_|_100%_|_67%_|_100%_|_67%_|81%|
|_Legal Appeals_|_100%_|_100%_|_100%_|_100%_|100%|
|_Transparency_|_85%_|_44%_|_85%_|_55%_|67%|
|**_Autonomy_**|59%|71%|68%|81%|71%|
|_Decision-Making Autonomy_|_79%_|_33%_|_86%_|_85%_|79%|
|_Budgetary Autonomy_|_94%_|_100%_|_100%_|_100%_|80%|
|_Leadership Autonomy_|_63%_|_50%_|_88%_|_88%_|66%|
|_Managerial Autonomy_|_0%_|_100%_|_0%_|_50%_|59%|

Note: Scores based on index developed for the Rethinking Power Sector Reform Project. For more details go to project website at http://www.esmap.org/rethinking_power_sector_reform With ERA’s powers and capabilities seemingly in line with international best practices, its legal authority over tariff setting and other regulatory functions has also been supported by strong and capable leadership.

Broadly speaking, there are three sets of tariffs: generation tariffs, arising from the PPAs between generators (Eskom Uganda and IPPs) and the single buyer (UETCL), which are approved by ERA; Bulk Supply Tariffs, charged by UETCL to the distribution companies; and End-user Tariffs, charged by distribution companies (mainly Umeme Ltd) to end-users. There are some particularities in the determination of each of these tariffs but, in general, they all follow required revenues (RR) methodology and a rate of return (ROR) regulation is applied. In the case of Umeme, the allowed ROR follows the 20 percent fixed rate of return that is embodied in Umeme’s concession contract. The principles governing tariff-setting for end-user tariffs are clearly articulated in the relevant codes and are based on marginal and average costs. A significant limitation of the tariff-setting process is the absence of regulatory accounting standards to structure the submission of cost information from the regulated companies.

ERA sets tariffs through a multi-year tariff setting process (of three-years duration) that is based on revenue requirements and end-user tariffs have been adjusted quarterly, adapting to a certain set of macroeconomic indexes, including the USD-shilling exchange rate, inflation, and the oil price, since the implementation of the ATA in 2014.

Between 2005 and 2012, the electricity sector revenue requirements were met through a combination of tariffs paid by end-users and subsidies paid by the government (directly from Treasury) and development partners. In these years of chronic crisis, ERA played an important role in maintaining tariff levels – though the government would pay the difference to keep end-user tariffs at a politically manageable level. However, ERA’s influence is seen to have increased in the years up to and following

> 18 For detailed regulatory indices, see the annex.

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