Eskom drops electricity price bombshell
Eskom and the National Energy Regulator of South Africa (Nersa) recently squared off in the North Gauteng High Court over the power utility’s plan to significantly increase electricity prices.
Eskom has asked the court to allow it to increase electricity prices by 16.6% on 1 April 2020 and by another 16.72% on 1 April 2021.
This is more than double the tariff increases which Nersa has awarded – 8.1% in 2020/2021 and 5.2% in 2021/2022.
Eskom argued that these higher electricity tariffs are needed to claw back the R69 billion bailout which it received from the government recently.
Nersa, in turn, said incompetence and maladministration at Eskom means that the public must now pay more for electricity.
The energy regulator added that its approved tariff increases balanced what consumers can afford, the impact on the economy, and Eskom’s sustainability.
The much bigger issue – Nersa’s power
Experts are warning that the immediate price increases linked to this legal battle is nearly insignificant when compared to the true impact – Nersa’s power.
Should Eskom win this case and a legal precedent is set, it will limit Nersa’s ability to protect consumers against drastic electricity price increases in future.
Rapport reported that Nersa currently relies heavily on the fairness of Eskom’s proposed electricity tariff increases to establish if it is affordable and fair towards the public.
Eskom, however, argues that Nersa is applying the law incorrectly by focussing in fairness and affordability.
Instead, Eskom said, Nersa should allow the power utility to increase prices to recover all its costs and make a fair profit, independent of whether the pricing is fair or not.
Eskom looking at new “critical peak” billing
Eskom is also looking at testing a new critical peak day tariff to deal with increased electricity demand.
The power utility said it previously applied to Nersa to have the tariff approved, but was turned down.
It now intends to revive the tariff and pilot it further as a voluntary customer option to assist with demand management on electricity-constrained days.
“Critical Peak Day pricing is a tariff option that has been internationally proven to reduce load on specific days when the system is extremely constrained,” it said.
“This is achieved by increasing the electricity price on these system-constrained days (critical peak days) and lowering the prices (compared to the normal tariff) on non-constrained days.”
Eskom said it will notify customers ahead of time about critical peak days.
“The Critical Peak Day tariff option provides customers with the flexibility to partner with Eskom in a win-win situation for both,” Eskom said.
“If customers choose to reduce their electricity consumption on critical peak days, the customers can save on the electricity bill”.
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