City of Cape Town rejects Eskom’s ‘unaffordable’ electricity price hike

The City of Cape Town has rejected power utility Eskom’s application to hike the electricity price, describing it as “unaffordable” amid the rising costs of fuel, food and others.

The public has until Friday, 14 January, to submit written comments to the National Energy Regulator of South Africa (Nersa) on Eskom tariffs.

These tariffs may increase by more than 40%, according to Nersa’s latest pro forma implementation plans.

Cape Town mayor, Geordin Hill-Lewis, has since written to Eskom CEO André de Ruyter asking him to formally withdraw the application to increase the price of electricity.

Eskom is seeking an average tariff increase of 20.5% for the 2022/2023 financial year.

‘Rising costs’

But Hill-Lewis says the proposed price hike is “unfair, unaffordable and unjustified”.

“Like the majority of South Africans, many Capetonians are struggling to make ends meet. The pandemic and national lockdown led to the closure of hundreds of businesses in our city and the loss of thousands of jobs.

“Our residents are faltering under the burden of the rising costs of energy, fuel, food, and basic consumer goods,” he said in a statement.

“The consumer price index [CPI] is currently stated as 5.5%; this would have been a more reasonable tariff increase for Eskom. The price of electricity has risen by 307% over the past 13 years, far exceeding inflation.

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“Despite paying more for power, South Africans have experienced an unreliable electricity supply — 2020 and 2021 were two of the worst load-shedding years on record,” Hill-Lewis said.

The Cape Town mayor suggested, among other things, that Eskom reduce its “bloated payroll” as well as end tenders with suppliers who provide the power utility with services at “massively inflated prices”.

“The law requires Nersa to table the 2022/23 price determination in Parliament by no later than 15 March.

“This means there is still time for Eskom to urgently revise its application. The city will petition Salga members, Nersa, and other stakeholders to oppose Eskom’s application if they fail to revise it,” he added.

Legal battle

Last December, the Pretoria High Court’s order ruled in favour of Eskom in the legal battle against Nersa.

Eskom had sought to have Nersa’s decision to reject its 2022/23 revenue application set aside as unlawful.

Judge Jody Kollapen ordered the regulator to decide on Eskom’s electricity tariff application by 25 February 2022.

Kollapen ruled that this must be adjudicated in line with the multi-year pricing determination (MYPD) methodology published in 2016.

READ MORE: Nersa’s plan would see households pay much more, says Eskom

The court also ruled that the methodology remains valid, until replaced by an alternative process.

The judgment was granted to Eskom in terms of part A of its court bid.

Eskom also seeks an order reviewing and setting aside the decision of Nersa to reject its tariff application for 2023/2024 as well as 2025 in part B of its application.

Nersa will conduct virtual provincial hearings between 17 and 21 January before making a final decision on Eskom’s application by 25 February.

Eskom’s new tariffs will be effective from 1 April for Eskom’s direct customers and from 1 July for municipalities.