Eskom welcomes 18.65% electricity price hike

Eskom has welcomed the National Energy Regulator of South Africa’s (Nersa) approval of an 18.65% electricity tariff increase.

The power utility had asked the regulator to approve a 32.02% price increase in its annual tariff application.

In a statement released on Friday, 13 January 2023, the power utility noted the difficulty of the decision that Nersa had to make and said it recognises the pressures that the decision will place on consumers.

Once Nersa makes a decision on the restructuring of tariffs, Eskom said it could apply the tariff adjustments to its customers from 1 April 2023.

“Eskom notes the decision by Nersa. This decision will positively contribute from a financial and sustainability point of view,” Eskom’s chief financial officer Calib Cassim said.

“The revenue determination of R319 billion and R352 billion for the financial years 2024/5 will allow a further migration towards a price level that reflects the efficient cost of producing electricity.”

The High Court of South Africa, in July 2022, ordered Nersa to decide on Eskom’s Multi-Year Price Determination application for financial years 2024 and 2025.

The regulator was granted an extension until 12 January 2023 to decide.

On 12 January, Nersa approved revenues of R318 billion for the 2023/4 financial year and R352 billion for the 2024/5 financial year.

Nersa said this amounts to an electricity tariff increase of 18.65%.

The regulator highlighted its concerns over the power utility’s high usage of emergency generating capacity, specifically its diesel-burning OCGTs.

Members of the regulator’s electricity subcommittee also raised concerns over Eskom’s declining energy availability factor.

“Eskom notes the tempering of the volume of diesel for the operation of open cycle gas turbines to a load factor of 6%,” Eskom said in response to Nersa’s announcement.

“It is evident that both Eskom and Nersa are aligned that every effort needs to be made to improve the energy availability factor at Eskom power stations.”

The power utility noted that Eskom’s generation performance and delays in adding Independent Power Producer projects to the grid must be addressed.

“It is noted that Nersa has reconsidered capital related costs when compared to the previous decision. This significantly contributes to allowing for Eskom to recover costs related to debt commitments,” Eskom added.

Now read: South Africa in crisis and heading for disaster — economist

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Eskom welcomes 18.65% electricity price hike