Nersa approves Eskom tariff hike

Tariffs will be increased by 9.4 percent for the 2016/17 year only.

Picture: Reinart Toerien/EWN.

JOHANNESBURG - The National Energy Regulator of South Africa (Nersa) has this afternoon approved Eskom's application for a tariff hike.

Tariffs will be increased by 9.4 percent for the 2016/17 year only.

Public hearings were held across the country earlier this year . Nersa says it took all submissions into account.

Big business, the mining sector and civil society groups strongly opposed a tariff increase, but the ailing utility said it needed a 16.6 percent hike to recover R22.8 billion.

Nersa was expected to make the announcement on Eskom's application last week, but said it needed to verify more information.

Last month, AfriBusiness urged the Nersa to consider whether consumers are able to fork out more for electricity.

Nersa has also only allowed Eskom to recover R1,2 million for its open cycle gas turbines, despite it asking for much more.

AgriBusiness's Stefan Pieterse said Eskom wanted consumers to pay for its inefficiencies. Eskom, however, argued that it had been prudent and transparent in its application for a tariff hike and insisted that buying diesel to keep the lights on was the last resort.

"The maintenance schedule is under Eskom's own control. It spent its maintenance budget but the benefit thereof seems questionable. Eskom has only itself to blame for the poor maintenance practices that we have to suffer for as a result."

The Chamber of Mines also warned that if Eskom's application was approved, 40,000 jobs could be lost.

In June last year, Nersa denied Eskom's application for a 25 percent tariff hike.

It announced the decision following a week of public hearings.

Nersa chairman Jacob Modise said, "The application did not provide the mechanism on how the proposed increase, if granted, will be implemented in the current financial year in a manner that is consistent with the requirement of the municipal financial act 2003."

Modise said Eskom could re-apply or just add the information it excluded from the last application.

Modise adds the balance of R11,2 billion is recoverable from standard tariff customers for the 2016/2017 financial year.

"The average tariff for average standard customers, will be increased by 9,4 percent for the 2016/2016 financial year only."

This hike is the total increase for customers in the new financial year and includes the previous amount agreed upon.

Energy Expert Chris Yelland says consumers should be relieved that Eskom wasn't granted its full claim.

"The reality is on 1 April, Eskom's standard tariffs will go up on average 9,4 percent. This will be followed by the municipal tariff increases and I would expect an increase of about 9,4 percent from the municipalities on 1 July as well."