Nersa to announce decision on Eskom’s tariff request

Thursday, February 28, 2013

Pretoria - The National Energy Regulator of SA (Nersa) will this afternoon make known its decision on Eskom’s request for a 16% tariff increase.

Nersa will announce its decision on the power parastatal’s revenue application for the Multi-Year Price Determination period 2013/14 to 2017/18 (MYPD3) at a media briefing scheduled for 1pm.

Last October, Eskom asked the regulator for a total 16% tariff increase over the next five years. The utility is asking the regulator for 13% for each of the five years for its own needs, plus 3% to support the introduction of Independent Power Producers (IPPs) which are expected to contribute 2% to the country’s energy grid.

The decision will come on the heels of the current MYPD 2’s coming to an end in March 2013.

At a Gauteng public hearing held last month, the power utility’s chief executive officer Brian Dames said that a stable supply of energy is crucial to power South Africa’s economic growth going into the future. Public hearings into the request were held nationwide.

Dames said that the request covered the cost of supplying power, investing in the future and financing new capacity.

Dames said Eskom was cognisant of the impact of its request, but that current electricity prices did not cover the full costs of producing electricity. The poor have also been considered under Eskom’s application, he said.

The tariff increase was necessary to maintain revenue as well as to cover operating costs and the financial stability of Eskom. The tariff Eskom was asking for, said Dames, should meet the requirements of both industry and consumers.

The proposed increase represents a total price increase from the current 61 cents per kilowatt hour in 2012/13 to 128 cents per kilowatt hour in 2017/18.

Nersa is tasked with making the decision on the application.

In November, at a New Age/SABC breakfast briefing Public Enterprises Minister Malusi Gigaba said the tariff increase was a necessity.

Gigaba said at the time although the power parastatal wished it could have kept its request to a single-digit figure, the double-digit tariff hike request was necessitated by the tough conditions prevailing in the economy. -