Consumers aren’t the only ones worried about how they are going to cope with a 9,61% electricity price hike in a few months.
So is Eskom.
But, unlike consumers, the power utility is not unhappy with the tariff increase being too high. Rather, for them the concern lies with it not being high enough.
On Thursday 24 February, the National Energy Regulator of South Africa (Nersa) approved a tariff of 133,64c/kWh for 2021/22 and 146,48c/kWh for 2022/23, which results in an increase of 9,61%. Eskom’s application had been for 20,5%.
Addressing the media on how the energy regulator processed and decided on the Eskom Allowable Revenue application, Nhlanhla Gumede, full-time regulator member (FTRM) primarily responsible for electricity regulation, said Eskom’s revenue application for the 2022/23 financial year coincided with various economic and social issues affecting the South African economy.
“Accordingly, the energy regulator’s decision provides a balance between the sustainability of Eskom and the economic well-being of the consumers and the economy,” Gumede said.
Next, Nersa will need to approve Eskom’s retail tariffs by Tuesday 15 March with the increase to take effect from Friday 1 April for Eskom customers. This is separate from the increase that municipal customers can expect to pay as of Friday 1 July.
A question that arose during the media briefing was what was to stop Eskom from taking Nersa’s decision on review again.
Eskom last week issued a statement, saying it noted Nersa’s revenue determination.
Calib Cassim, Eskom’s Chief Financial Officer (CFO), said: “The financial implications of this decision on Eskom’s long-term sustainability will need to be further understood.”
The statement further read that the Eskom board would deliberate further before deciding on how to continue to sustainably provide electricity to the extent possible in the context of this revenue decision.
“In addition, Eskom keenly awaits the reasons for the decision that will provide further details on how the revenue determination was arrived at,” read the statement.
Gumede said the actual Reason for Decision (RFD) document would be released 60 days after Nersa’s decision, “primarily to allow the applicant to apply for any matter that they would like to remain confidential” and also to ensure it is properly edited and corrected.
On whether he thought Eskom would take Nersa’s decision on review, Gumede said where Nersa had lost out before was largely because of procedural fairness. He explained the methodology was a guide but in applying the guide, you needed to apply it in such a manner that allowed the affected party to also comment, to disagree, to say whether it understands or agrees with the opposition. Gumede said, they had allowed Eskom to do so.
