Consumers in Iran Using Less Electricity

EghtesadOnline: The number of electricity subscribers who adhere to the consumption patterns outlined by the government has increased by 10% compared to last year, managing director of Iran's Power Generation, Distribution and Transmission Company (Tavanir) said at the weekend.

News ID: ۷۴۸۸۶۹

04 November 2019

“Close to 85% of consumers in the household sector is within the average 300-kilowatt hour per month bracket, which is set as a basic consumption model. Around 15% of the subscribers are considered heavy consumers,” the Energy Ministry news service Paven quoted Mohammad Hassan Motevalizadeh as saying.

Of the total 30 million subscribers in the household sector, 25 million have shown to be judicious consumers, Financial Tribune quoted him as saying.

Power consumption in Iran is among the highest in the world, but the momentum of growth has slowed down in the past two years.

Up until 2017 growth in electricity consumption was between 5%-7%. This summer it was 2.5%.

This summer in cooperation with household, industrial, commercial and agricultural sectors, consumption increased barely by 1% during peak hours compared to a year ago.

The highest registered consumption last year was 57,097 megawatts and reached 57,681 MW this year. It was reported that if the various sectors do not cooperate, consumption would reach 61 gigawatts.

Power generation costs, including production and transmission, is 2 cents per kilowatt-hour while electricity was sold at 0.7 cents per kWh up until June.

Electricity, gas, gasoline and water are subsidized in Iran and successive governments have said that the heavy subsidies cannot be sustained due to chronic economic problems and declining government revenues due largely to the new US sanctions. The entire concept of subsidies has come under a very big question mark for years with proponents and opponents pushing ideas and views that are poles apart.

Higher Tariffs

Veteran economists and experts agree with government proposals saying so long as water and electricity prices are not adjusted upwards, the problem of overconsumption and waste will persist.

In a bid to encourage the people to cut consumption, the government raised power tariffs for four summer months (June to September) when the temperature and power consumption rise phenomenally -- mainly in the southern regions. This summer the mercury shot up to 50°C.

Tariffs were increased by 7% for judicious consumers and 23% for those exceeding a certain consumption level announced by Tavanir.

Consumers were also offered discounts in billing if they consumed electricity in the four summer months less than the set consumption model.

Revenues generated by the higher tariffs were used to replace the old traditional electric meters with smart gadgets and reduce waste by improving and optimizing infrastructure, mainly the distribution networks.

Judicious consumption significantly reduces the need for new power plants that come at great cost to the treasury only to meet high demand in the summer months, Motevalizadeh said, adding that programs to encourage different sectors to cut consumption have become a permanent feature of the utility.

Based on a contract between the Energy Ministry and the agriculture sector, farmers who turned off their water pumps during peak hours (12 p.m. to 4 p.m.) were eligible for discounts in the non-peak hours.

Industrial consumers who shifted load from peak to off-peak times were also given discounts.