Johannesburg - The Nelson Mandela Bay Business Chamber has said that all electricity consumers would potentially pay only a 3.5 percent increase in electricity tariffs from next year instead of the 8 percent Eskom tariff hike approved by the National Energy Regulator of South Africa (Nersa).
The chamber’s deputy president and energy task team board lead MC Botha yesterday said this would have a knock-on effect on the increase in municipal electricity tariffs that were scheduled to take place on July 1 next year.
The cautious optimism comes in the wake of the chamber and four Port Elizabeth-based energy intensive companies successfully obtaining an interdict in the North Gauteng High Court on Tuesday to set aside Nersa’s decision on March 1 this year on Eskom’s third multi-year price determination application.
Botha said the estimated national saving to consumers was conservatively estimated at between R40 billion and R60bn if the High Court decision was implemented over the remainder of the multi-year price determination period.
“This bold intervention by the Nelson Mandela Bay Business Chamber and the supporting businesses was not aimed at benefiting the interest of a small sector of industry but all users of electricity throughout the entire country,” he said.
Botha said the chamber had over the past year lobbied extensively against unsustainable electricity increases on all available platforms.
No direct refunds
“No electricity user will be refunded money directly, but the amounts overcollected by Eskom in terms of the (now) unlawful RCA (regulatory clearing account) increase in the Eskom tariffs will be refunded by way of a reduction in next year’s electricity tariffs,” Botha said.
Nersa spokeswoman Poppie Mahlangu said the regulator would only take a position on the High Court ruling once it had thoroughly examined the judgment.
Eskom said earlier it would wait for a decision on the way forward by Nersa.
Charmane Russell, a spokeswoman for the Chamber of Mines, said the chamber welcomed any relief from the tariff increase.
Russell said the chamber opposed Eskom’s application and noted when the increase was granted that it was significantly higher than inflation and would have a major impact on the industry’s cost base.
Roger Pitot, an adviser to the National Association of Automotive Component and Allied Manufacturers, said the court decision would make “the world of difference to our members”.
“If you have year-on-year increases above inflation, you go backwards on your ability to compete.
“For some of our members in Port Elizabeth and elsewhere, electricity accounts for about 15 percent of their factory costs,” he said.
Denise van Huyssteen, the communications general manager for Africa and the Middle East at General Motors, said escalating utility prices in general had been a major concern to the company and it was therefore “very encouraged” by the judgment.
Welcome reduction
Matt Gennrich, a spokeswoman for Volkswagen South Africa, which has its manufacturing plant in Uitenhage, said it obviously welcomed any reduction in services cost, but needed to see if these reductions actually occurred in terms of any legal process that followed the High Court ruling.
Peter Attard Montalto, emerging markets economist at Nomura International, said the nub of the issue was that it was “unfair and unjust” for Eskom’s inefficiencies to lead to high tariffs.
Montalto said Nersa had been asked to re-examine this tariff increase and there were likely to be many appeals by both Eskom and Nersa.
“In reality, we think a re-assessment by Nersa is unlikely to remove the whole award but could lower it slightly,” he said.
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