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Nersa expected to announce decision on Eskom 15% tariff hike application

Mar 7, 2019
Nersa expected to announce decision on Eskom 15% tariff hike application

Eskom’s 15% electricity tariff increase, if granted, will add another burden to consumers, who are already struggling under hefty petrol price hike on Wednesday.

All eyes are on the National Energy Regulator of South Africa (Nersa), which is expected on Thursday to announce its decision on whether businesses and residents will be paying more for electricity.

Eskom wants to increase electricity tariffs by 15%.

NERSA held public hearings on Eskom’s Third Multi-Year Price Determination (MYPD3) Regulatory Clearing Account (RCA) Year 5 (2017/18) application and MYPD4 revenue application in January this year.

The public hearings started on 14 January 2019 in the Western Cape and ended on 4 February 2019 in Gauteng.

In Cape Town, Eskom said that the tariff hikes were necessary as, due to various factors, the tariff was increased at below inflation for the past two years.

The power utility also said that the 15% tariff increase that it is asking for is still not enough to cover all its debts.

However, most of the submissions made at the hearings, from business and community representatives, urged NERSA to reject Eskom's 15% tariff hike request.

'Granting Eskom a 15% electricity tariff increase will hurt economy'

Speaking on behalf of the Nelson Mandela Bay Business Chamber, board director, MC Botha, said the ripple effect of such high tariffs could lead to economic decline, a decrease in investment and an increase in unemployment and poverty.

The Business Chamber has been actively defending the interest of businesses by lobbying against unreasonable tariff hikes at Nersa’s public hearings since 2006, and strongly objected to the latest application.

Botha said the application was unrealistic and could mean that Nelson Mandela Bay consumers would contribute R17-billion in revenue to Eskom over the next three years. This would include a total increase of about R5-billion.

He also argued that Eskom’s sales forecast during the MYPD 4 period is based on the assumption that increased prices would have no effect on electricity sales, while the Business Chamber expects Eskom’s sales to decrease by at least 3% per year, in line with a report by Deloitte.

“It is clear there was a substantial deviation [in the past] between what Eskom forecast and the sales that were achieved,” said Botha.

“We maintain that Eskom’s increases must be contained within inflation to stimulate electricity usage.”

Botha commended Nersa for their approach to Eskom’s previous application, where Nersa granted a 5,23% increase instead of the 19,9% increase requested by Eskom. He also encouraged the regulator to continue along this path.

“What we’ve heard today is an abject admission of failure by Eskom. We are not in safe hands. Eskom expects the electricity user to pay for its inefficiencies.”

Eskom’s 15% electricity tariff increase, if granted, will add another burden to consumers, who are already struggling under a hefty fuel price hike on Wednesday.

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