Nersa approves an 18.65% electricity tariff increase for Eskom

The National Energy Regulator of South Africa (Nersa) on Thursday announced that Eskom will be allowed to increase electricity tariffs by 18.65%.

The new revised tariffs and prices will be effective from 1 April.

Deadline pushed

Nersa was expected to announce its decision on whether to approve or dismiss Eskom’s revenue application to hike electricity prices in November last year.

While the announcement was postponed to 23 December, Nersa’s electricity regulation subcommittee indicated that it needed more time to process Eskom’s application before it made a decision so the Pretoria High Court pushed the deadline to 12 January 2023.

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Eskom had applied for a 32% tariff increase for the 2023/2024 financial year and an additional 22.52% in 2024/2025.

The ailing power utility was looking to recover R351 billion through the tariff hike in 2023/2024 and had planned to recover R381 billion the following financial year.

‘Best interest’

During a media briefing on Thursday, Nersa chairperson Thembani Bukula said Eskom’s revenue application was considered under several economic challenges

While Eskom will get a 18.65% hike for 2023/2024, Bukula also confirmed that Nersa approved an increase of 12.74% for 2024/2025.

These means Eskom will be allowed to recover R318 million and R352 million respectively for both financial years.

In a meeting earlier before the announcement, Nersa said it was unfortunate that the regulator was caught between a rock and a hard place.

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“If we don’t approve a particular number hoping that Eskom will do the correct thing then we could be deemed to be budgeting for load shedding,” Nersa regulator member Nhlanhla Gumede said.

“Whatever decision we land on, we must be able to struck a balance between what is the best interest of the overall South African economy and the public.”

Gumede highlighted that it was known that “Eskom can’t be efficient”.

“Therefore in whatever application they make for the use of diesel…. we are saying to consumers out there ‘pay for these plants that are not working, but over and above that also still pay for more diesel’. We all know that is unfair,” he continued.

Nersa previously only granted Eskom a 9.6% hike despite asking 20.5%.

‘False choice’

Meanwhile, trade union Solidarity called on Nersa to “pay more attention to applications from private power generators and less attention to Eskom’s applications for more expensive power”.

“The time that Nersa spends every year to consider Eskom’s tariff increase application can be spent much better on policy review to allow new entrants to the power grid to supply their services.

“In the end, this is the only way South Africa would be able to emerge from the current energy crisis,” Theuns du Buisson, economics researcher at the Solidarity Research Institute (SRI), said in a statement.

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Du Buisson said Solidarity was of the view that Eskom’s increasing debt and drop in power supply posed the biggest threat to the South Africa’s economy.

“The false choice of either Eskom getting the tariff increase or of it being dependent on even more bailouts is being presented to South Africa on an ongoing basis, but the fact remains that we see both of these harmful concessions being made every year.”

The country is currently on stage 6 load shedding, and it will remain in place until further notice.