Electricity price hikes in store

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iol news pic CW_Collin Matjila Eskom

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Eskom acting Chief Executive Officer Collin Matjila briefing the nation on the state of the electricity system. Photo: Simphiwe Mbokazi

Johannesburg - Electricity price hikes are in store for Cape Town, Tshwane and Buffalo City residents next month.

A total of some 9 million people face increases of up to 15 percent after 13 municipalities applied for above-average tariff rises.

The National Energy Regulator of SA (Nersa) held public hearings on the municipalities’ applications to consider submissions on the proposed increases above the 7.39 percent it approved for the 2014/15 financial year.

Nersa’s Charles Hlebela said a decision on the applications would be taken before July 1.

Tswelopele municipality, which includes the Free State towns of Bultfontein, Phahameng, Hoopstad and Tikwana, has applied for a 15 percent hike. According to the municipality, the tariff hike, which will be the highest if approved by Nersa, is required for upgrades and new infrastructure.

Cape Town wants a 7.63 percent tariff hike due to a decline in sales, to fund a new electrification programme and to upgrade its notified maximum demand, as well as to implement its apprentice programme.

Tshwane and Buffalo City – which includes East London, King William’s Town and Bhisho – have applied for electricity hikes of 9.2 percent and 10.76 percent respectively.

The three metros that want above-average increases – Cape Town, Tshwane and Buffalo City – suffered more than R1.1billion in electricity losses in 2012/13.

Tshwane’s loss was the highest, with electricity distribution losses of more than R622m because of theft, tampering and faulty meters.

Cape Town’s energy losses totalled more than R400m, which it blames on theft and vandalism, while Buffalo City’s stood at just over R85m.

Other municipalities that want above-average power hikes include Cederberg, Beaufort West and Witzenberg, as well as Abaqulusi, Endumeni and Mpofana (KwaZulu-Natal), Emalahleni (Witbank) in Mpumalanga, Inxuba Yethemba (Cradock and Middleburg) in the Eastern Cape, and Hantam (Calvinia) in the Northern Cape.

The nine municipalities have applied for 8-12.11 percent increases.

Among the reasons they cite are revenue protection, dealing with costs of under-recovery, upgrading infrastructure, refurbishment and maintenance of old infrastructure, and high distribution losses.

Nersa expects municipalities applying for above-average increases to justify them. They need to provide a full analysis of their reasons.

The analysis includes a detailed revenue analysis and list of items such as repairs and maintenance to be funded by the extra revenue.

The money generated must be ring-fenced to ensure it is strictly utilised for the identified projects, and if not used for the correct purposes, the funds will be claimed back in the following financial year.

Nersa expects municipalities to report on a six-monthly basis on how the additional revenue is used.

According to George Thopil and Professor Anastassios Pouris, of the University of Pretoria’s Institute of Technological Innovation, Eskom has been forced to increase prices significantly to recoup monetary resources to invest in the ever-increasing demand for electricity.

The country charges domestic consumers more than double the amount paid by industrial consumers.

Thopil and Pouris believe the industrial sector is underpriced in South Africa.

Weekend Argus


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