Big electricity price increase proposed

Eskom is in a financial death spiral and the power utility is now borrowing money and getting bailouts to pay off older debts.

This is according to energy expert Anton Eberhard, who is a member of President Cyril Ramaphosa’s Eskom Sustainability Task Team.

The City Press reported that Eskom will have to spend more money on servicing debt because of the power utility’s poor credit rating.

Eskom’s credit rating has fallen to below investment grade, also known as junk status, which means it has to pay higher interest rates for credit.

“Revenues and bailouts are simply not covering costs and debt servicing, which means there has to be more revenue, fewer costs, or more bailouts,” said Eberhard.

He blamed state capture for the financial mess, explaining that “grand corruption at Eskom has had the effect of hollowing out crucial skills like those of station managers”.

Big price increase possible

The National Energy Regulator of SA (Nersa) recently proposed that all municipalities increase their electricity prices by 13.07%.

Rapport reported that Nersa published these guidelines recently and asked for feedback from stakeholders by Friday.

The main reasons for the big price increase are higher wholesale tariffs from Eskom and above-inflation increases in salaries and maintenance.

The Johannesburg Property Owners and Managers Association said the price of electricity has increased by 290% between 2008 and 2019.

It added that the electricity spend per household increased from just over 2% in 2008 to the current 4%.

Now read: Eskom’s big blunder – How poor decisions and corruption caused load-shedding

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Big electricity price increase proposed