Electricity to increase by 9.4% this year

SA's energy regulator will allow the power utility to hike electricity prices for the next three years.

Nersa chairperson Jacob Modise speaks on the regulator’s decision to allow Eskom to hike tariffs over the next three years. Picture: Twitter (@SAgovnews).

The National Energy Regulator of South Africa (Nersa) has approved struggling energy utility Eskom’s application to hike their tariffs.

But while Eskom was hoping to drive prices up by 15% for each of the next three years, Nersa granted a smaller increase than initially requested. Eskom put forward two applications, in an attempt to increase their annual revenue by R784 billion.

In 2019, prices will increase by 9.42%.

In 2020, it will be increased by 8.1%.

In 2021, it will be increased by 5.22%.

Nersa held public hearings across South Africa and asked the public for comment on the proposed hikes. According to the regulator’s chairperson, Jacob Modise, 119,000 comments were received.

In January pressure groups, among them the Organisation Undoing Tax Abuse (Outa) and the South African Faith Communities Environment Institute, argued in Nersa’s hearings that Eskom’s operational model needed overhauling and that further tariff increases would cause dire harm to the general economy and the average South African consumer.

The hearings happened as it was reported that Eskom was expected to post of loss of more than R15 billion in the year to March 31.

In December 2018, Nelson Mandela Bay Business Chamber asked energy regulator Nersa to stop the roll-out of new independent power producers (IPPs) due to their “catastrophic impact” on Eskom, and to investigate and renegotiate all existing contracts with IPPs.

The chamber represents about 700 businesses and has been very active in fighting for affordable electricity tariffs at Eskom and municipal level. Nelson Mandela Bay is an industrial hub that consumes about 1.5% of national electricity consumption.

The chamber’s David Mertens told Moneyweb the organisation has nothing against the principle of introducing renewable energy or IPPs, but that the numbers as set out in Eskom’s tariff application “stink”.

The chamber made the call to Nersa in its written submission in response to Eskom’s application to recover revenue totalling R762 billion over the next three financial years from electricity users through increased tariffs.