Eskom proposes 16% tariff increase

South African Local Government Association (SALGA) said on Wednesday that Eskom has submitted regulatory clearing account (RCA) to recover R22.8 billion, translating into a proposal for 16% tariff increase.

SALGA said it understands and accepts the RCA process, but also wishes to point out the unintended consequences which defeat the purpose of having a 5-year multi-year price determination.

“At the heart of this, the question that needs to be asked is whether the South African economy and its citizens are ready for another unaffordable electricity increase at this point?  Affordable and reliable electricity still underpins every aspect of social and economic life of citizens and the country,” said SALGA in a statement.

SALGA members contribute to more than 40% of the Eskom’s electricity sales which means that municipalities are a major stakeholder and contributor to Eskom’s heartbeat and sustainability.

“SALGA and its members support the financial sustainability of Eskom but also maintain this sustainability being achieved responsibly and not to the detriment of the customers and the public as a whole.”

“SALGA has to protect the interest of the customer and its members and therefore remains concerned about affordability for customers and municipalities.”

The South African National Energy Regulator (NERSA) is hosting public hearings on Eskom’s application for the evaluation and approval of the regulatory clearing account (RCA) balance for the financial year 2013/2014 for the third multi-year price determination (MYPD3).

The public hearings, where SALGA is fully participating, are being rolled out nationally, having commenced on 18 January in Cape Town until 5 February 2016 in Johannesburg.

The RCA process reconciles variances between the actual costs that Eskom incurred in 2013/2014 financial year in the production of electricity and the MYPD3 record of decision by NERSA.