CAPE TOWN - The National Energy Regulator of South Africa (Nersa) decision to approve a 9.61% increase in the price of electricity for Eskom instead of the requested 20.5%, has been widely welcomed.
Nersa at a meeting on Thursday said it had considered Eskom’s Multi-Year Price Determination (MYPD) 5 revenue application for the 2022/23 financial year of R239bn, including previously approved Regulatory Clearing Accounts (RCA) translating into a tariff increase of 20.5% over the 2021/22 Nersa decision.
The energy regulator approved Eskom’s allowable revenue of R249bn for the 2022/23 financial year translating into a tariff percentage increase of 9.61%.
Eskom in a statement said the revenue determination will allow for implementation from April 1.
“Eskom had made its MYPD 5 revenue application to Nersa on June 2, 2021 for the FY 2023 to 2025 in accordance with the prevailing Nersa methodology, as published in 2016. On September 30, 2021, the energy regulator rejected the application.
“Eskom was required to make a new application based on a methodology yet to be published. Eskom successfully reviewed this energy regulator decision in the high court with regards to FY 2023. The court provided Nersa with a time frame to undertake its consultation, analysis and determination process.”
Eskom chief financial officer Calib Cassim said the financial implications of this decision on Eskom’s long-term sustainability will need to be further understood.
“It is understood that Nersa considered the impact on consumers and the financial sustainability of Eskom as it made its decision,” Cassim said.
Eskom said its board will deliberate further before deciding on how to continue to sustainably provide electricity to the extent possible in the context of this revenue decision.
“In addition, Eskom keenly awaits the reasons for the decision that will provide further details on how the revenue determination was arrived at.”
Civil society activist Sandra Dickson said Nersa had once again made a bold decision, which may see Eskom approach the courts for a fifth time.
“This provides some relief to the already hard-pressed consumers. However, this increase is still way above the inflation rate and far above the current salary increases in the private and public sectors,” Dickson said.
She said Eskom’s response was ominous
“This may imply further court action or perhaps more load-shedding. If Eskom’s previous actions is anything to go by, they will not take this lower tariff approved by Nersa increase lying down,” Dickson said.
Mayor Geordin Hill-Lewis said the tariff increase approved by Nersa was a clear rebuke of Eskom.
Electricity tariff increases for City customers will be determined through the Budget process and increases will come into effect from July 1.
“This increase is less than half of what Eskom asked for, and is a clear rebuke to Eskom’s totally unrealistic request. While I am happy that Nersa took the voice of thousands of Capetonians into consideration, it must be noted that the increase of 9.1% is still 4.1 percentage points higher than inflation.”