Eskom wants to hike electricity prices even higher

Eskom wants R27.2 billion to be added to power tariffs to account for the amount under-recovered in the 2018/19 period, the City Press reports.

National energy regulator Nersa has published Eskom’s latest application for public comment, in which Eskom suggests that this increase be implemented over the next two years.

It is unlikely that Nersa will come to a decision in time to implement Eskom’s requested increase to tariffs before the 2020 tariff increase takes place, however.

If Nersa was to grant Eskom the full R27.2 billion for 2021, electricity tariffs for the year would increase by 11.38% rather than the currently expected 5.01%.

The application is made in terms of the regulatory clearing account (RCA), which allows Eskom to retrospectively mitigate risk that assumptions regarding tariffs may be incorrect.

As part of the application, Nersa will compare Eskom’s spending in the 2018/19 period to the tariff that it was awarded for this period.

According to Eskom, it was awarded R86 billion in this period, while its costs totaled R99.4 billion.

Eskom’s claims

Eskom said that its increased expenditure is due to several miscalculations.

The national power utility wants an additional R5.4 billion to be allocated as a result of lower-than-predicted sales.

This does not include reduced sales as a result of load-shedding, Eskom said, which cost Eskom R762 million over the course of 418.5 hours of power cuts.

Eskom said that sales to municipalities, mines, and households were particularly lower than expected.

The power provider also said it spent R16.7 million more on the purchase of coal than was predicted.

Eskom criticised Nersa for allocating less to coal purchases in the 2018/19 period than it did for the previous year. This figure was also nearly R10 billion less than what Eskom applied for.

The power provider said that Nersa did not account for the cost of existing coal contracts which Eskom had already committed to; instead, the regulator supposedly based the figure on an index that ignored Eskom’s procurement policy as well as developments in the mining sector.

Eskom also wants R4.8 billion for various other costs including depreciation and operations.

Load-shedding returns

Eskom has re-introduced load-shedding over the past week, implementing stage 2 load-shedding on Thursday before escalating to stage 4 on Friday.

The national power utility attributed these power outages to a variety of reasons, including its generating plant operating at low levels of reliability, unplanned breakdowns totalling in excess of 12,500MW, and wet coal.

Eskom expects stage 2 load-shedding to take place on Sunday between 09:00 and 23:00.

Now read: Eskom stage 2 load-shedding on Sunday

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Eskom wants to hike electricity prices even higher