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Nersa approves 3 electricity tariff hikes for next 3 years

Energy experts say Eskom’s application is short-sighted and reckless, saying it would no longer serve the interests of the economy.

The Nersa panel listens to hearings on Eskom's proposed tariff increase. Picture: @NERSA_ZA/Twitter

JOHANNESBURG - The National Energy Regulator of South Africa has announced it will increase electricity tariffs by 9.41% for the first year of 2019/20.

Nersa further announced on Thursday that for the year 2020/21, the hike will be 8.10% and 5.22% for 2021/22.

Eskom had asked for of 17.1% for 2019/20, 15.4% for 2020/21 and 15.5% for 2021/22.

Chairperson Jacob Modise also instructed Eskom to provide a plan within the next six months about how it will cut costs.

“Nersa will perform independent evaluations of Eskom's Regulatory Asset Base. If necessary, adjustments will be made. Nersa will further perform an audit on Eskom’s generation fleet.”

Eskom has been arguing for some time that it is battling financially - but consumers and big business have been resistant to the calls for yet another tariff increase.

This followed months of public hearings across the country where many businesses argued that another tariff hike would have catastrophic consequences for the economy.

Energy experts described Eskom’s application as short-sighted and reckless, saying it would no longer serve the interests of the economy.

'NO POLITICAL INTERFERENCE'

At the same time, Nersa said there was no political interference in its decision to hike electricity tariffs.

Nersa's Nomfundo Maseti said the cost of criminal and fraud cases at the power utility was also considered to an extent.

“All of the cost that is associated with criminal activities and fraud will not have powers to do so. That’s why we factored it into the decision to state that we will take some of those costs to the extent those agencies have made certain findings and as they come out.”

Meanwhile, President Cyril Ramaphosa has acknowledged that Eskom faces operational and structural problems.

He says in the longer term, the restructuring of the utility will position the electricity sector to embrace new technologies, distribute generation and respond to other changes.

“It will help to diversify the generation of electricity across a multitude of power producers, thereby reduces the country’s reliance on a single supply.”

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