Govt welcomes Nersa's decision

Friday, June 26, 2009

Pretoria - Government has welcomed the National Energy Regulator of South Africa's (Nersa) decision to grant Eskom a tariff increase of 31.3 percent.

Nersa granted the power utility an interim increase on Thursday effective from 1 July. Eskom had requested a 34 percent hike from the regulator to cover its operational expenditure.

"Government welcomes the decision. This will assist the utility in funding its operational costs, which have risen sharply in the recent past," said a joint statement from the Departments of Energy and Public Enterprises.

Tariffs have historically increased annually at a lower rate than inflation which was no longer commercially sustainable due to rising operating costs.

"Bringing tariffs to a level that accurately reflects the cost of electricity provision whilst enabling capacity expansion for future needs will of its own volition result in an efficiency correction in South African electricity use," it said.

However, the departments felt that the poor needed to be cushioned from high electricity costs

"We are mindful of the fact that low-income households must be protected from the increases, and their tariff increase will be kept to 15 percent as directed by the Regulator," said the statement.

The departments said that, together with Eskom and other stakeholders, government would continue to work towards finalizing a funding solution for Eskom's investment programme.

"Once the global economic recovery begins, demand for electricity will once again pick up, and it is essential that Eskom's investment programme is not delayed or curtailed, thereby ensuring that South Africa's economic growth will not be subject to electricity supply constraints, and that the nation's current and future security of electricity supply is assured," said government.

However, the departments felt that the poor needed to be cushioned from high electricity costs.

"We are mindful of the fact that low-income households must be protected from the increases, and their tariff increase will be kept to 15 percent as directed by the Regulator," said the statement.

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