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Nersa turns down Eskom's 19.9% tariff increase request, grants 5.23%

Chairperson of Nersa Jacob Modise says they will be publishing a document with all the reasons for the tariff hike.

Nersa chairperson Jacob Modise (C) at the briefing on the announcement of Nersa’s decision on Eskom’s revenue application for 2018/2019 financial year. Picture: Katleho Sekhotho/EWN.

JOHANNESBURG – Chairperson of Nersa Jacob Modise says the energy regulator has approved Eskom’s revenue application of R190,348 billion. This is a 5.23% tariff increase.

Modise says they will be publishing a document with all the reasons for the tariff hike.

He added they held public hearings across the country to afford stakeholders to contribute their views and comments, saying one point raised from public hearings is that a proposed increase will negatively affect the poorest in society.

This comes as Public Enterprises Minister Lynne Brown addresses a special general meeting at Eskom to officially introduce the new board announced a week ago.

The power utility had asked Nersa for an increase of just under 20% which many had argued would impact economic growth.

Nersa's Mbulelo Ncetezo said: “Some of the adjustments we’ve made here are forcing Eskom to change the way they operate. They are ensuring that Eskom doesn’t just do anything. Like for instance, I’ll make an example with the fact that they’ve got excess capacity. They’ve got excess capacity.”

Cash-strapped Eskom, which has been engulfed in a governance crisis says its needs high electricity price increases to shore up its balance sheet.

ESKOM'S DISAPPOINTED

Eskom says its disappointed by the 5.23% tariff hike it’s been granted.

Nersa says if Eskom doesn’t take its own sustainability seriously by making the right decisions to cut costs, it can’t expect consumers to pick up the slack.

Modise says the regulator does assist Eskom by advising the power utility on where it’s overspending.

“But in a lot of areas like man-power costs and operating costs and most of the areas, our analysis indicates that Eskom is not taking the decisions they ought to be taking.”

Modise says it’s still up to Eskom to make cuts where it needs to.

“You’ll also see that we’ve given Eskom an extra R5.4 billion additional return because Eskom was supplying a much lower turn based on a lower-weighted average cost of capital.”

Eskom has released a statement on Friday afternoon, saying its disappointed that it won’t be getting a double-digit hike.