Eskom seeks 16% price hike
Eskom wants to put up electricity prices by 16 percent a year for five years.
On Monday morning, the state-owned electricity utility said it had applied to the National Energy Regulator of SA (Nersa) for permission to increase its revenue from customers by an average of 16 percent a year to 2017/18. Nersa must approve any power prices.
This will effectively double the price of electricity from today’s average of 61c per kilowatt-hour (c/kWh) to 128c/kWh in 2017/18.
“Eskom needs to keep the lights on and this has a cost,” said Eskom CEO Brian Dames.
If the prices are approved, the first increase will start on April 1 next year to Eskom’s customers; municipalities will have to include that in their annual increases in July.
Eskom’s application focuses on increasing the utility’s revenue, but ultimately this means a price increase as the utility is not funded by the government.
Eskom said 13 percent is to cover Eskom’s own costs, and the additional 3 percent is the cost of introducing independent power producers (IPPs) – the private businesses which will start producing power during those five years to sell to Eskom.
Dames said electricity prices were still below cost-reflective levels and this was not sustainable.
The current price agreement – the Multi-Year Price Determination 2 (MYPD2) – was a two-year agreement which runs until March 31 next year.
The new price application – the MYPD3 – is for a five-year agreement, which Eskom said was to give more stability to the public.
Eskom encouraged the public to comment on the application.
The Eskom application to Nersa is on the Eskom website at www.eskom.co.za