Pretoria - The South African Local Government Association (SALGA) has welcomed the decision by the National Energy Regulator of South Africa (NERSA) to reject Eskom’s selection re-opener application for a 25 percent increase in tariffs.
“SALGA reiterates that Eskom’s application was undesirable and would have had many unintended consequences if it was granted in its form and this would have meant that local government was going to be forced to absorb the impact within the approved municipal operating budget – thereby subsequently having to pass additional increase on to the consumer,” SALGA spokesperson Sivuyile Mbambato said.
On Monday, NERSA announced that it would not grant Eskom’s application for the Selective Re-opener of the third Multi-Year Price Determination (MYPD3) application for its Open Cycle Gas Turbines (OCGTs) and the Short-Term Power Purchase Programmes (STPPPs) and the impact of the increase in Environmental Levy.
Mbambato said an increase in Eskom’s tariffs would have serious implications for the financial viability and sustainability of municipalities.
He said the end-user tariffs proposed by Eskom was not only five times higher than inflation, but was also unreasonable and not financially viable
“SALGA would like to see further funding options explored by Eskom towards building a financially viable Eskom,” Mbambato said.
Had the Eskom application been granted, this would have meant that the electricity price would have increased from 2008 to date by a cumulative 166 percent, he said.
“The continued lack of certainty and predictability in the electricity prices remains a serious challenge for the economy of the country.
“SALGA reaffirms its support for Eskom’s viability as a national strategic asset but calls for the power utility to conduct its business consistent with the government’s economic objectives,” he said.
Mbambato said there is a need to explore long term solutions and a possible re-look at Eskom cost structure, including its coal contracts. – SAnews.gov.za
