Electricity Ministry studies changing how your electricity bill gets calculated

How your electricity bill gets added up may change before the rates on it do. The Electricity Ministry is studying scrapping the system that calculates household electricity bills progressively across consumption brackets, two government sources tell EnterpriseAM. Both stressed the plan is still under study, and neither said what rates a new structure would carry. “The main goal is to create a fair and accurate pricing system that closes the gap between current pricing and the cost that keeps rising because of higher global prices and the greenback,” one source says.

Why it matters: The bill for that gap keeps growing, and the government has ruled out closing it the obvious way. The Finance Ministry raised the electricity subsidy allocation to EGP 104.2 bn this fiscal year from EGP 75 bn to help cover the widening gap between production costs and consumer tariffs. Rather than raise prices again, the Electricity Ministry is studying a change to how household bills are calculated, with several scenarios still on the table.

Here’s how your bill actually gets built: Household tariffs come in seven brackets. The first 50 kWh stayed at EGP 0.68 / kWh in August’s increase. The second bracket rose to EGP 0.87 from EGP 0.78 and the third to EGP 1.06 from EGP 0.95. The fourth and fifth went to EGP 1.74 and EGP 2.18, the sixth to EGP 2.35, and the seventh, covering anything above 1k kWh, to EGP 2.89.

But you don’t pay one rate on everything you use: Bills are calculated progressively, so a household pays the lower brackets’ rates on part of its consumption, the second source says. A household in the third bracket, for example, still benefits from the first and second brackets’ rates on part of what it uses.

Which is why the state ends up paying most of a small bill: A household using 50 kWh a month covers just 25% of what its electricity costs, with the state picking up EGP 103, according to the ministry’s statement. At 100 kWh, the household pays 30% and the state covers EGP 191. The share rises with consumption: 42% at 200 kWh, 49% at 300 kWh, 54% at 400 kWh, 59% at 500 kWh, 62% at 600 kWh, and 88% between 700-1k kWh. A household using 2k kWh a month pays the full cost, according to the ministry, even though the highest tariff bracket starts above 1k kWh. The ministry calculates those shares against the cost of producing 1 kWh at the fuel prices power producers pay, and on that basis the state bears EGP 100 bn a year.

The gap keeps widening because the fuel keeps getting dearer. Power plants still pay USD 4 / mmBtu for natural gas, unchanged since April 2025, one source says. The sector’s monthly gas bill has jumped to EGP 34 bn from an average of EGP 12-13 bn last year. Oil has climbed above the USD 70 a barrel the budget assumed, alongside its exchange-rate assumption of EGP 47 to the USD, the source says.

So the ministry is looking at the arithmetic instead of the rates. Scrapping the graduated calculation is the most likely scenario among those being weighed, the second source says. A unified price “may be a solution to end this debate through fair progressive brackets that allow support for the lower-consumption brackets and reduce the consumption bill,” the source says. Both sources expect the change to make a big difference to sector revenues and encourage households to use less. They also said it would give consumers a clearer billing method after complaints about monthly bills rose.

August’s increase was calibrated for a war that was expected to end. The government set it against the budget’s oil price assumptions and the expectation that the conflict would be over before the fiscal year began, the sources say. It was meant to cover part of the higher fuel bill, narrow the cost gap, and leave surpluses for plant maintenance. Under current conditions, there is no talk of surpluses.

The next move is about changing the calculation. The government is studying holding electricity prices until the end of the fiscal year to protect consumers, a senior government source says, with the ministry’s restructuring changing how brackets are calculated without raising their tariffs — and the resulting accounting difference going toward the sector’s finances.

Meanwhile, the debts are coming down. The electricity sector owes the petroleum sector around EGP 400 bn, down from EGP 480 bn in June, paid from bill collections and subscriptions alongside Finance Ministry support, while the petroleum sector continues supplying the grid’s mazut and gas.