South Africans are in for a hefty rise in the price of electricity, as the National Energy Regulator of South Africa (Nersa) has agreed to Eskom increasing its tariff by over 15% for the 2021/22 financial year.
The agreement between Nersa and Eskom came after the power utility won a case in the Pretoria High Court in October 2020, which allowed it to push for a higher tariff increase than what Nersa was willing to allow.
Under the agreement, an amount of 5.44c/kWh will be added to the average standard tariff, bringing the rate Eskom customers will be forced to pay in the 2021/22 tariff year as of April 1 to 134.30c/kWh – a 15.63% increase.
The increase will see the debt-laden Eskom raise a further R10 billion in “allowable revenue”, according to a court order issued by Judge Joseph Raulinga.
Though the tariff increase is a further blow to cash-strapped South Africans, it’s a boost for the beleaguered power company, which has over R400 billion in debt and is owed R31.5 billion in overdue debt by several municipalities.
Eskom welcomed the move, saying the implementation of the order would move it “towards addressing some of the revenue shortfalls” and “enable it to recover prudently incurred costs for the production of electricity,” which in turn would help to improve its financial sustainability.
It said also contributes to the “user pay” principle and was likely to lessen the financial burden of supporting Eskom on the government, releasing the government to focus on other priorities.
Organised business said the increase will be a double blow for consumers. They will see not only pay directly for the increase but also have to face up to businesses passing on tariff increases to them through higher prices, said Business Unity SA (Busa) energy and environment policy manager, Jarredine Morris.
Aside from the steepness of the tariff rises, Morris said there is also a problem in the methodology in how the tariff increases were calculated and implemented. As things now stood, this process made tariff increases difficult to predict, which in turn made it hard for businesses to plan ahead.