Eskom seeks big jump in power rates

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PowerLines Reuters.

South African power utility Eskom has applied to raise electricity rates by 14.6 percent per year over five years, a confidential document obtained by Reuters showed on Friday.

Eskom said the increases could be as much as an annual average increase of 19 percent over the same period, depending on certain government decisions.

Eskom needs to fund an expansion drive and build new power plants to keep the lights on in Africa's largest economy.

Sharply rising power rates have added hugely to the costs of key sectors such as mining in the world's biggest platinum producer.

One of the world's lowest-cost electricity producers, Eskom, which provides 95 percent of the country's power, was granted three years of 25 percent power tariff hikes in 2010.

“In the base case Eskom requests revenues totalling 1.07 trillion rand ($128 billion) over the five-year period, which translates into annual average price increases of 14.6 percent,” Brian Dames, Eskom's CEO, said in the document marked “strictly confidential”.

But this could climb to 19 percent if the government brings in a carbon tax or builds new plants beyond those currently under construction, the document says. - Reuters

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