Electricity price hikes for 2022 announced
The National Energy Regulator of South Africa (Nersa) has approved an average electricity tariff increase of 9.61% for the 2022/2023 financial year.
During a briefing on Thursday, 24 February 2022, Nersa chairperson Nhlanhla Gumede said that the regulator had approved Eskom’s allowable revenue for the year at R249.726 billion.
That is R26.531 billion less than the R276.257 billion for which Eskom had applied.
Gumede said Nersa decided on this increase by balancing the interests of the economy, consumers, and the power utility.
The price hikes will take the average electricity tariff in South Africa from just over R1.33 per kWh to around R1.46.
Eskom had requested an increase of 20.5% in its fifth year Multi-Year Price Determination (MYPD5) allowable revenue application to the regulator.
That would have taken the average standard tariff to about R1.61.
The table below shows the allowed revenue Eskom had requested, the amount approved by Nersa, and the impact on the average tariff.
Several civil action organisations, business groups, and municipalities criticised Eskom’s proposed increase, as it was much higher than South Africa’s official inflation rate.
South Africa’s Chamber of Commerce and Industry warned the approval of this increase could be disastrous for the country’s businesses.
Paired with substantial increases in fuel prices, this would also punish individual users.
Eskom has said the tariff hike was necessary to cover the cost of its debt, carbon taxes, and the higher price of electricity purchases from independent power producers (IPPs) compared to its own coal fleet.
Even with a 20.5% tariff hike, Eskom CFO Calib Cassim said Eskom would still require government support of R21 billion over the next two financial years to help service its debt.
While the increase Nersa is allowing is far below what Eskom had asked for, it is still above South Africa’s average inflation rate of 4.5% in 2021 and 5.7% in January.
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