Nersa grants Eskom 8% tariff hike

Thursday, February 28, 2013

Pretoria - The National Energy Regulator of SA (Nersa) has granted power parastatal Eskom an 8% tariff increase over the course of the next five years of the Multi-Year Price Determination period 2013/14 to 2017/18 (MYPD3).

“Nersa approved an 8% average increase per annum for the next five years. The average electricity price will increase to 65.51 cents per kWh in 2013/14 up to 89.13 cents in 2018,” said Cecilia Khuzwayo, chairperson of Nersa, on Thursday.

In its application to Nersa in October 2012 for a tariff hike, Eskom asked the regulator to grant it a total 16% hike over the course of a five-year period.  The total 16% would be split, with 13% going to the parastatal’s own needs and 3% to support the introduction of Independent Power Producers (IPPs).

This as the current MYPD2 comes to an end at the end of March 2013. The first and the second determinations had been over a three-year period.

“What we’ve done [is to] look at costs and give what is appropriate,” Thembani Bukula, chairperson of the electricity subcommittee, said of the determination, adding that the decision was based on facts and evidence.

Nersa said that the total five-year revenue approved amounted R906 553 million.  

The increase, said the regulator, which is tasked with determining tariffs for Eskom, on the homelight 20A customers consuming up to 350 kWh per month will be limited to CPI of 5.6%, while the increase on homelight 20A customers consuming more than 350kWh per month will be 7.6%  

Approximately 200 stakeholder comments were received by the regulator, while a total 162 oral representations were made during public hearings conducted nationwide.

“We believe that what we have done in our analysis, we’ve adjusted their [Eskom] returns to ensure that they service all the debt, they service all of the operations and also ensure that they’re efficient in the process of servicing those operations.

“In our view, 8% is exactly what they require to ensure that they still provide power and they do it in a manner that is efficient,” said Bukula.

“We normally tell them what the decision is and then they deal with the decision,” said Bakula in response to a question on whether the regulator had been in talks with the parastatal.

Eskom spokesperson Hilary Joffe said that the utility would study the regulator’s decision. “We have noted the decision. Eskom will study it in detail to assess and understand its impact,” she told SAnews.

The regulator was of the view that the increase was sufficient for the utility to operate the power system sufficiently.

“Our function is not to run Eskom to the ground but to ensure that they are efficient, effective and sustainable and we believe 8% will do exactly that,” he said.

National Union of Metalworkers of South Africa (NUMSA) Secretary General, Irvin Jim, expressed mixed feelings about the hike.

“From where we’re standing, it’s a bit of a mixed feeling in the sense that we welcome the 8% [granted to Eskom], it’s not the 16% as was applied for. Secondly, we are worried about the fact that it’s above inflation [which currently is at 5.4%].

“What we’re also not happy about is that instead of being given an increase over a three-year period, they’ve been given an increase over five years. In that we’re losing an opportunity where we could have used that three years to debate alternative forms of funding,” he said.

Before Nersa’s decision being made public, members of the union had been picketing outside the Nersa office.

“No to 16% tariffs. Stop privatisation of electricity,” read one placard. -