Eskom: Our expenses are already above CPI

Eskom has ruled out suggestions that it proposed an inflation-linked electricity tariff hike.

File: An activist is seen protesting at the Nersa hearings into Eskom's proposed new electricity tariff structure in Cape Town on 15 January 2013. Picture: Nardus Engelbrecht/SAPA

MIDRAND - Eskom has ruled out suggestions that it proposed an inflation-linked electricity tariff hike, saying its expenses are simply too high.

The parastatal ruled out the idea on Friday, at the closing session of the National Energy Regulator of South Africa's (Nersa) public hearings into its proposed electricity hike in Midrand.

The power utility wants an increase of 16 percent every year for the next five years.

Eskom's chief financial officer, Paul O' Flaherty, said their expenses were already above the consumer price index (CPI).

"Our primary energy costs are at 8.6%, our coal costs are at 10% on average [and] our operating costs are at 8%".

He said they could not budge on the 16 percent because the power utility could not raise more debt on the open market.

"For every 1 percent reduction from the (proposed) 16 percent, we would require an additional R25 billion."

Nersa said it would announce its decision later in February.