Johannesburg - Eskom said on Monday that it would study the decision made by the National Energy Regulator of South Africa (Nersa) to not grant the power utility the 9.58 percent tariff increase.
“We note the decision made by Nersa, and we will study the details of the determination and consult with the Shareholder before we can comment further on its impact,” Eskom acting chief executive Thava Govender said in a short statement.
Eskom said the increase was meant to fund higher usage of open cycle gas turbines (OCGTs) and to cover the cost of buying electricity through the short-term power purchase programme (STPPP) in order to limit the “severity of load shedding and the impact on the economy”.
The power utility requested a 9.58 percent tariff increase in the selective reopener for the third multi-year price determination (MYPD 3) for the period July 1, 2015 to March 31, 2016.
The power utility applied for a 25.3 percent increase in electricity tariffs for the current year, of which Nersa approved a 12.6 percent increase on April 1.
The regulator conducted two days of public hearings on Eskom’s tariff hike application in Johannesburg last week. Businesses, trade unions, civil society groups and ordinary citizens overwhelmingly opposed the application, saying that it was not affordable, and would lead to job losses, notably in the small business sector.
Eskom indicated that it needed an additional R32 billion to pay for its diesel supply to run the OCGTs. The power utility has for months been implementing load shedding as it tries to balance its maintenance schedule and electricity demand.
The Democratic Alliance (DA) welcomed Nersa’s decision to reject Eskom’s application for a 25.3 percent tariff hike for the 2015/16 financial year.
DA energy spokesman Gordon Mackay said the decision ought to be hailed as a victory for all electricity consumers, for the economy, and for unemployed South Africans.
“Despite ongoing pressure by government and the ruling alliance, Nersa demonstrated true independence today by refusing to be strong armed into exorbitant tariff increases that would have had disastrous consequences for our economy,” Mackay said.
“It is unthinkable that Eskom expected an increase of that nature which would have been an external shock to our economy, resulting in a massive reduction in jobs, an unsustainable increase in input costs, and the unavoidable closure of many small and medium sized firms across South Africa.”
He said that load shedding was robbing South Africans of their livelihood because investors were losing confidence in the economy and the manufacturing industry was forced to cut jobs.
Mackay said that the electricity crisis has already cost the economy billions and resulted in countless job-losses which passed on the problem to consumers through above-inflation tariff increases.
He said Nersa’s decision would pave the way for the “long term reform” of the energy sector in South Africa.
ANA