Nersa expected to announce decision on Eskom tariff hike application

The power utility is asking for a 16.6 percent tariff hike, saying it needs to recover R22.8 billion.

Power lines leaving Eskom’s Duvha power station, 15km east of Witbank. Picture: AFP.

JOHANNESBURG - The National Energy Regulator of South African (Nersa) is expected to announce a decision on Eskom's application for a tariff hike by the end of the month.

Several organisations presented their arguments at the final day of public hearings in Midrand yesterday.

The utility is asking for a 16.6 percent tariff hike, saying it needs to recover R22.8 billion, some of which was used to buy diesel to operate the Turbines to avoid load shedding.

However Energy advisor Ted Blom said the costs will be even greater if Eskom continues to use the OCGTs.

"Assuming that Eskom attempts to clawback over expenditure on OCGT at R8 billion and that's the current figure, the other R2 billion it's coal, for the remaining four years, that means there's an extra clawback of R32 billion on the diesel account.

"And that's a conservative estimate, it could be five to 10 time higher than that. The total clawback then will be close to R110 billion."

Blom has also criticised Eskom's lack of maintenance on the grid.

Many organisations have also questioned Eskom's use of the open cycle gas turbines, saying diesel costs are too high and if this continues the utility may want to clawback again in the future.

The Chamber of Mines has warned about the possibility of 40,000 job losses if Eskom's application is approved.

Sibanye Gold's Peter Turner said it's difficult to plan ahead without reliable and affordable electricity.

"The last thing an investor wants is surprises. We are seeing disinvestment, we're seeing the economic turmoil and at the heart of that, I think Eskom has a huge role to play."

Business Unity South Africa (Busa) has raised concerns about the tariff hike. It said companies have already bared the brunt of increases and planning for the future becomes a futile exercise.

Busa's Martin Kingston says businesses need to know Eskom's plan going forward in terms of supply.

Kingston said there are a number of other factors affecting business at the moment including the economic climate.