Nelson Mandela Bay Business Chamber 'extremely' disappointed by Nersa decision

MARCH 2, 2016

The Nelson Mandela Bay Business Chamber on Tuesday said that it is extremely disappointed with the increase awarded to Eskom, as it constitutes once again an unaffordable hike for businesses operating in Nelson Mandela Bay.

This comes as the National Energy Regulator (NERSA) announced onTuesday that in analysis of Eskom’s Regulatory Clearing Account (RCA) application for the first year of the third Multi-Year Price Determination (MYPD3) (2013/14), electricity tariffs will be increased by 9.4% for the 2016/17 financial year.

Business Chamber Member Company Autocast’s Executive Director David Mertens said the additional increase is based on the RCA for 2013/14, which constitutes shortages of income and increases of expenses Eskom incurred three years ago.

“Per the MYPD3 decision from 2013 and the five-year price path following on from that, the increase for 2016 should have been limited to 3.5%. This is the case because Eskom was already awarded a 12.6% increase in 2015/16, well above the 8% originally awarded for that tariff year. By awarding a 9.4% increase, Nersa allowed an increase of an additional 5.9%. This is above what was foreseen in the MYPD3 decision. This amounts to about R10-billion which the electricity consumer will have to pay extra during the next year,” Mertens said.

This additional increase is a great disappointment for the Nelson Mandela Bay Business Chamber, as it hits all electricity users – businesses and households alike- during a particularly difficult time in the country’s economy.

“Year after year, electricity consumers are being burdened with above inflation price increases. These lead to further strain on all consumers. Energy intensive industry is being given the wrong signs and is being told that South Africa is not their investment destination of choice,” Mertens said.

While the Nelson Mandela Bay Business Chamber still await further detail in relation to Nersa’s decision, representatives from the Business Chamber will engage further with the Electricity Department of the Nelson Mandela Bay Municipality as scheduled on Friday, to consult and determine the extent that the tariff increases will have on businesses operating in Nelson Mandela Bay. 

Mertens and Nelson Mandela Bay Business Chamber Deputy President MC Botha was part of a Business Chamber delegation who presented at a public hearing on the RCA application on January 20 in Port Elizabeth.

“The vicious circle of above inflation price increases and reduced consumption has not been broken and this will aggravate the situation for future years. Nersa has decided to maintain the status quo, which is to condone Eskom’s inefficiencies and to push above inflation price increases onto a consumer who cannot afford to pay for this. Given the fact that Eskom’s underperformance for 2014/15 and 2015/16 have been blatant, as consumers, we can only brace ourselves for the worst,” Mertens said.