This comes after the National Energy Regulator of South Africa (Nersa) on Wednesday, 18 June 2008, awarded Eskom an additional 13.3% average increase.
This is in addition to the 14.2% already approved in December 2007, resulting in a 27.5% average increase year-on-year.
“The regulator decided to allow Eskom to recover additional primary energy costs of R2.827 billion through its electricity tariff which amounts to a 13.3% average increase,” Nersa Chairman Collin Matjila told reporters on Wednesday.
“These adjustments will result in a standard tariff revenue of R48.188 billion and total revenue including Special Pricing Agreements sales of R50.801 billion,” said Matjila.
The increase is well below the 53% or 60% nominal increase that Eskom had initially asked for.
With regards to smoothing of prices as part of Multi Year Price Determination, Matjila said: “If the current economic climate continues to prevail and Eskom's capital expenditure programme remains as it is, then a tariff increase of between 20 and 25% per annum is projected over the next three years.”
Nersa further recommended that Eskom's conditions of licensing should be amended to ensure that the power utility manages its risks efficiently and optimally, particularly with regard to primary energy.
“The energy regulator wishes to assure the public that it will continue to carry out its mandate by efficiency and effectively regulating the electricity industry for its sustainability,” said Matjila.
Meanwhile, government says it is pleased that the national regulator has provided certainty in electricity pricing.
“We welcome the decision that Nersa has taken. It confirms government's view that, as a country, we cannot avoid higher than normal electricity price increases, but at the same time we have to be aware of the current economic hardships faced by many of our people,” the Minister of Minerals and Energy Buyelwa Sonjica said.
Sonjica said a team from National Treasury, the Department of Public Enterprises and Eskom was currently working to finalise the appropriate fiscal injection by the state to strengthen Eskom's balance-sheet to enable the company to enter financial markets competitively.
“In the coming months, Eskom will submit its tariff application for next Multi-Year Price Determination (MYPD2) given the rule changes that will cover primary energy pass-through,” she said.
Article published courtesy of BuaNews
