Network charges prepayment a cash flow concern for suppliers

A market regulation requiring independent electricity suppliers to prepay network charges to operators ahead of respective incoming payments from  consumers through their electricity bills is proving to be a major cash flow issue for suppliers.

According to current regulations, independent electricity suppliers need to provide operators their network charges, for each month of consumption,  within 45-day periods, despite receiving respective sums by consumers, through electricity bills, over periods lasting as many as 80 days.

Independent suppliers have requested a 30-day extension to this 45-day period so that their cash inflow and outflow concerning network charges may coincide.

This uncoordinated inflow and outflow of network surcharges is forcing electricity suppliers to commit large amounts of capital for coverage of cash flow gaps created by the early payment demands they face.

Independent suppliers commanding bigger market shares and enjoying greater growth are being forced to commit more considerable amounts for this purpose. These surcharge payments do not carry any profit margins for independent suppliers.