Eskom applies for annual 16% hike

Eskom has applied for a 16% increase in tariffs every year for next 5 years.

Eskom logo.

JOHANNESBURG - The power utility has submitted its application requesting the increases to the National Energy Regulator of South Africa (Nersa).

If the Nersa approves Eskom's application, the price of power will increase from the current 61c/kwh to 128c/kwh by 2018.

Eskom CEO Brian Dames said their current tariffs can't cover the cost of supplying electricity.

The power utility also has to repay around R180 billion which it loaned to build more infrastructure.

Dames said they will continue to take into account the needs of the poor by using cross subsidies from various sectors of society.

Consumers will know this week if Nersa will approve the application.

Eskom's Hillary Joffe said they applying for a higher tariff because South Africans have generally been paying too little for their electricity.

"For many years, as long as three decades, electricity prices were well below the cost of inflation."

But economist Mike Schussler said, "There is just no way that we can keep on increasing it."

Schussler argues that it's inconceivable for a country that produces coal and has its own power station to also have among the highest rates for electricity in the world.