Nersa granting Eskom only 9.6% hike still bad for economy, consumer

While it may seem like South Africans had dodged the bullet on a fuel price increase, according to experts, consumers must brace themselves for an electricity increase which will be double the inflation rate from 1 April.

Energy analyst Chris Yelland said although the National Energy Regulator of SA (Nersa) gave Eskom half of what they had initially asked for, the increase was going to eat into the consumer’s overall income, which was not good for the customer or SA’s economy.

“This means less money on the table for food, less disposable income which puts further pressure on the customer. But not only on domestic customers, also commercial and industrial customers,” Yelland said.

“But Eskom will say that the price increase is not enough and that it should be higher because their financial survival depends on a higher price.”

He also said the bottom line was that the less Eskom received from the price of electricity, the more they would get from the taxpayer in the form of bailouts from the government.

This was after Nersa decided to grant Eskom a 9.61% tariff increase for 2022-23 instead of the 20.5% increase which the power utility had asked for.

According to Nersa, the tariff increase was made of 3.49% for the 2022-23 year as well as legacy decisions from previous years, which brings it to 9.61%.

However, the energy regulator warned that the prices were “indicative”, as the actual price was still to be finalised.

“It is important to note that Eskom’s revenue application for the 2022-23 financial year coincides with various economic and social issues currently affecting the South African economy,” Nersa chair Smunda Mokoena said.

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“Accordingly, the regulator’s decision provides a balance between the sustainability of Eskom and the economic wellbeing of the consumers and the economy.”

Eskom noted the announcement, stating that the timeous determination will allow it to apply the adjusted price to customers.

Eskom’s chief financial officer Calib Cassim said the Eskom board would “deliberate further” before deciding on how to “continue to provide electricity to the extent possible in the context of this revenue decision”.