Business Report

Eskom could push electricity costs up

Eskom could push electricity costs up

Eskom could push electricity costs up

By Siphelele Dludla Time of article published 12m ago

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STRUGGLING consumers could fork out more for the unit price of electricity if Eskom is allowed to recover a further R23 billion through electricity tariffs starting April 1.

The power utility will today oppose an appeal by the National Energy Regulator of SA (Nersa) against the judgment by the High Court Gauteng Division that gave it permission to recover R69bn over 3 years.

Yesterday, Nersa approved an additional R6bn of allowable revenue through the electricity tariff for Eskom from April following its re-adjudication of three regulatory clearing account applications for the 2015 to 2017 financial years and a supplementary tariff application for the 2019 financial year.

The additional revenue would mean about 1.5 to 2.5 percentage point increase over and above the approx 8.5 percent increase expected in April.

Nersa's member of electricity regulation Nhlanhla Gumede said the timing over which Eskom will recoup the additional revenue had not yet been decided.

Gumede, however, said that if the full additional R6bn was recovered in the same financial year, the electricity tariff would be higher than the 5.22 percent increase initially approved as part of the fourth multi-year price determination (MYPD4) determination.

“If the additional revenue is recouped by Eskom over the coming 2021/2022 financial year, it would result in an estimated tariff increase of 10.95 percent,” Gumede said.

Eskom has always maintained that electricity tariffs were much lower than the cost of production.

Last year, the South Gauteng High Court ruled that Nersa unlawfully included a R69bn equity injection from the government in its calculation of Eskom's allowable revenue for 2019 to 2022.

The court then mandated the energy regulator to decide how the monies would be recovered by Eskom in the upcoming financial years.

The 2022 financial year is the last year of the MYPD4 period and the R23bn revenue represents one year of the three-year R69bn equity injection.

Eskom's general manager for regulation Hasha Tlhotlhalemaje said the price of electricity was still migrating towards efficient production levels.

Tlhotlhalemaje said the efficient costs for the production of electricity did not go away.

“If consumers do not pay, then the

taxpayer would have to pay,” Tlhotlhalemaje said.

“The extent of the increase is yet to be determined by Nersa and it is hoped

that that will happen by the end of February. Eskom prefers that the user pays for the electricity rather than be subsidised by the taxpayer.”

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