Eskom confirms price increase

Monday, March 23, 2015

Pretoria - Eskom has confirmed that a price increase will be implemented on 1 April 2015.

“Eskom confirms that the price increase to be implemented on 1 April 2015 to Eskom direct customers is still 12.69% and for municipalities will be 14.25% from 1 July 2015 as approved by the National Energy Regulator of South Africa (Nersa) during November 2014,” it said on Friday.

Eskom said its current financial position, as a result of historical non-cost reflective tariffs and the lag in recovery of eligible expenditure, does not afford its balance sheet the ability to pre-fund further costs that are necessitated by a constrained power system such as short term power purchases from independent power producers and municipal generators and the increased use of open cycle gas turbines.

“These constraints have necessitated Eskom to explore options for further review of tariff increases for the 2015/16 financial year. Submissions in terms of the Multi-Year Price Determination (MYPD) methodology have been made to Nersa in this regard.”

The power utility has initiated a selective reopener of the MYPD 3 application from the 2015/16 financial year onwards, which proposes an adjustment in the tariffs.

This is due to costs incurred securing further short term power purchases and increased use of open cycle gas turbines.

In terms of the Municipal Finance Management Act (MFMA), Eskom is required to first consult with National Treasury and the South African Local Government Association (SALGA) prior to submitting to Nersa for consideration.

Eskom will consider these comments before submitting to Nersa. Nersa will then follow its normal governance processes before making a decision.

“Further, the announcement by the Minister of Finance in the Budget Speech of the proposed increase in the environmental levy is yet to be promulgated. This will have an impact on the required tariff and as such, Eskom will need an adjustment in terms of the tariffs due to the levy,” it said. –