VZCZCXRO0717
RR RUEHBC RUEHDE RUEHKUK RUEHROV
DE RUEHAM #1997/01 1890817
ZNR UUUUU ZZH
R 070817Z JUL 08
FM AMEMBASSY AMMAN
TO RUEHC/SECSTATE WASHDC 3003
INFO RUEHEG/AMEMBASSY CAIRO 3708
RUEHDM/AMEMBASSY DAMASCUS 3923
RUEHJM/AMCONSUL JERUSALEM 5081
RUEHTV/AMEMBASSY TEL AVIV 1244
RUEHEE/GCC COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
RHEBAAA/DEPT OF ENERGY WASHDC

UNCLAS SECTION 01 OF 02 AMMAN 001997 
 
SENSITIVE 
SIPDIS 
 
STATE FOR NEA/ELA, EEB, NEA/PPD AND ECA/PE/VFA 
DOE FOR OFFICE OF ENERGY EFFICIENCY & RENEWABLE ENERGY 
 
E.O. 12958: N/A 
TAGS: ENRG ECON KPAO JO
SUBJECT: Jordan's Electricity Sector Providing High-Quality Service 
at Higher Rates 
 
Sensitive but unclassified; please protect accordingly. Contains 
proprietary information - not for distribution outside the USG. 
 
Refs: A) AMMAN 628 
      B) 07 AMMAN 2752 
 
¶1.  (U) This is an action request.  Please see paragraph 8. 
 
¶2.  (SBU) Summary: Electricity demand in Jordan grew 13% in 2007 to 
reach 2,100 megawatts (MW).  In response to rising fuel prices, the 
Electricity Regulatory Commission (ERC) raised electricity tariffs 
in mid-March 2008, which has helped reduce electricity demand growth 
in Jordan to a projected 7-8% for 2008.  Projecting that the annual 
growth rate will stay around that level until 2020, the Government 
of Jordan (GOJ) has estimated that electricity demand in 2020 will 
be approximately 5,700 MW, requiring an additional generated 
capacity of an average 300 MW per year.  Despite this challenge, the 
ERC feels confident that Jordan will be able to continue providing 
high quality, uniform service to customers nationwide with very few 
to no blackouts.  Post welcomes Washington feedback on opportunities 
or ideas for facilitating exchanges between the Jordanian 
Electricity Regulatory Commission and other U.S. electricity 
regulatory commissions, particularly the California Energy 
Commission.  End Summary. 
 
Structure of the Electricity Sector 
----------------------------------- 
 
¶3.  (U) The Electricity Regulatory Commission is a financially- and 
administratively-independent body composed of five commissioners 
that was established by the GOJ to regulate and monitor the 
electricity sector.  The ERC's main functions include issuing 
licenses for the generation, transmission and distribution of 
electricity; issuing sector regulations; determining electricity 
tariffs and connection charges; contributing to technical and 
environmental standards; and making recommendations to the GOJ for a 
more competitive market.  Chairman Dr. Hisham Khatib and several 
commissioners informed Econoffs that since 2002, the Commission has 
been operating under Temporary Law No. 64.  KhatibQplained that 
the law has not yet become permanent due to "internal politics." 
NOTE: Temporary laws in Jordan, issued in the absence of a 
parliament, have the full effect of regular laws until reviewed by 
parliament.  END NOTE. 
 
¶4.  (U) While ERC regulates the sector, under Jordan's current 
"Single Buyer Model," only the National Electric Power Company 
(NEPCO) is authorized to purchase locally generated electricity (ref 
B).  Two main local generators -- Central Electricity Generating 
Company and Samra Electric Power Generating Company -- have been 
selling power to NEPCO, and a third, Amman East Independent Power 
Producer (IPP) run by AES/Mitsui, is expected to begin generating 
electricity in July 2008.  NEPCO in turn sells power to three 
distributors and principal consumers at regulated bulk supply 
tariffs.  Distributors distribute and sell power to customers at 
regulated retail tariffs, which are categorized according to 
industry and market segment. 
 
¶5.  (SBU) Several companies have complained to Econoffs that while 
industries are allowed to generate their own electricity, the 
current law prohibits them from selling any excess power to 
neighboring companies or entities within the same industrial areas. 
The ERC acknowledged the current constraint, and said it was being 
examined.  The ERC explained to Econoffs that the future vision of 
the electricity sector in 10 to 15 years entails wholesale 
competition. 
 
New Tariff Structure 
-------------------- 
 
¶6.  (U) The ERC set new, higher electricity tariffs, effective March 
14, 2008, which replaced the former rates issued in July 2005.  The 
measure aimed to respond to rising fuel prices, to maintain cost 
recovery, and to raise the necessary capital to continue investment 
in the power sector (ref A).  The ERC does not expect to change the 
rates again before the end of the year.  Khatib confirmed that the 
below-retail tariffs are set at zero cost to the government budget, 
although some of the higher bracket rates cross-subsidize the lower 
ones. 
 
Non-commercial, domestic consumer rates (i.e., households, public 
buildings, union offices, places of worship, hospitals, slaughter 
 
AMMAN 00001997  002 OF 002 
 
 
houses, cultural/sports clubs, and charities): 
 
¶A.  1-160 kWh/month - 32 fils ($0.045)/kWh 
¶B.  161 - 300 kWh/month - 71 fils ($0.100)/kWh 
¶C.  301 - 500 kWh/month - 85 fils ($0.120)/kWh 
¶D.  Over 500 kWh/month - 113 fils ($0.159)/kWh 
 
Commercial consumer tariffs (including TV, broadcasting, 
restaurants, and hotels):  86 fils ($0.121)/kWh 
 
Four-star hotels and above connected to the network before the 
tariff came into force may choose the commercial flat rate or a 
three-part tariff: 
 
¶A.  Maximum load tariff: 3.79 JD/kW/month ($5.35) 
¶B.  Day energy tariff: 81 fils ($0.114) for each kWh sold 
 
  during the day between 07:00 and 23:00 
¶C.  Night energy tariff - 70 fils ($0.099) for each kWh sold during 
the night between 23:00 and 7:00 the following day 
 
Small industrial consumers (supplied from low-voltage networks with 
maximum loads not exceeding 200 kW):  49 fils ($0.069)/kWh 
 
Medium industrial consumers (supplied from medium-voltage networks 
(33, 11, 6.6 kV) or supplied from low-voltage networks with a load 
level exceeding 200 kW), and agricultural consumers connected to the 
network before the new prices came into effect: 
 
¶A.  Maximum load tariff - 3.79 JD ($5.35)/kW/month 
¶B.  Day energy tariff - 46 fils ($0.065) for each kWh sold 
 
   during the day between 07:00 and 23:00 
¶C.  Night energy tariff - 36 fils ($0.051) for each kWh sold during 
the night between 23:00 and 7:00 the following day 
 
Agriculture (flat rate tariff, including water pumping for 
irrigation, livestock, and poultry and bird farms):  47 fils 
($0.066)/kWh. 
 
Water pumping and sewage treatment plants:  41 fils ($0.058)/kWh. 
 
Ports sector: 58 fils ($0.082)/kWh 
 
Jordan Armed Forces:  81 fils ($0.114)/kWh 
 
Street lighting:  51 fils ($0.072)/kWh 
 
 
Slow-Down in Electricity Demand 
------------------------------- 
 
¶7.  (U) The ERC confirmed that higher rates have caused electricity 
demand to slow down.  Although Khatib said that it was still too 
early to determine the full effect, the rate of growth appeared to 
be almost half.  He estimated that it would be around 7-8% this 
year, compared to 12-14% in 2007.  Despite the challenge of meeting 
increased demand, Khatib felt confident that Jordan would continue 
to provide high quality, uniform service to customers nationwide, 
noting that there are very few to no blackouts.  NOTE: ERC 
statistics indicate that 99.9% of the population was supplied with 
electricity in 2007.  END NOTE. 
 
Facilitating Contacts in the U.S. 
--------------------------------- 
 
¶8.  (U) ACTION REQUEST: The ERC expressed the desire to develop 
contacts and exchange ideas on energy efficiency and demand side 
management with U.S. electricity regulatory agencies in the U.S., 
noting particular interest in the California Energy Commission.  The 
ERC noted it would be willing to cover hotel and other local costs. 
Post welcomes Washington feedback on opportunities or ideas for 
facilitating such exchanges. 
 
Visit Amman's Classified Web Site at 
http://www.state.sgov.gov/p/nea/amman 
 
RUBINSTEIN