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Eskom wants 25.3% tariff increase

To take effect in less than two weeks.

Eskom’s electricity tariffs may increase by 25.3% from April 1 this year for its direct customers and July 1 for municipal customers if an application to the national regulator is approved. 

The increase has the full support of government’s war room.

It is aimed at paying Eskom’s diesel bill in order to avoid load shedding and to extend and conclude short-term agreements to buy electricity from other producers (short-term power purchase programme = STPPPs), including companies like Sasol and Sappi as well as municipal generators like City Power. It also makes provision for the increased environmental levy announced by Finance Minister Nhlanhla Nene during his budget speech.

News of the application came after the City of Cape Town issued a statement on Thursday night in which it expressed its concern that many customers won’t be able to pay the huge increase. The City also apologised to its customers for having to table a draft budget next week that reflects electricity tariffs that may increase further if the Eskom application is approved.

Moneyweb reported in February that Eskom may be applying for a re-opener, but neither Nersa nor Eskom would respond to questions at the time.

Eskom is now asking for a selective re-opener of the tariff determination that was earlier granted for the five years from April 1 2013 – March 31 2018. An annual tariff increase of 8% was then granted. The increase for 2015/16 was later increased to 12.69% to compensate Eskom for under-recovery in the previous tariff period.

If the new application is granted it would apply to the remaining three years of MYPD 3. It would see tariffs increase by 25.3% in 2015/16, drop by 3.24% in 2016/17 and increase by 7.26% in 2017/18. These are the total proposed increases, including those granted earlier.

Eskom says in a submission to the local government association Salga and National Treasury dated March 16 that government won’t give any further equity injections over and above the promised R20 billion that will be paid over in the new financial year.

It says credit downgrades have seen it at the limit of any significant borrowings and even if there was appetite among financiers, the cost would be too high.


The news also broke on Thursday that Standard & Poors has downgraded Eskom to junk status, a mere four months after Moody’s did the same.

Eskom further states that it is on a drive to save between R50 billion and R60 billion over five years and has reprioritised capital spending, bringing the total down from R337 billion to R300 billion.

It says a full re-opener of the MYPD3 tariff determination would take 12 to 18 months and therefore the war room suggested a selective re-opener.

The basis for the re-opener is that Eskom assumed in its MYPD3 application that Medupi, Kusile and Ingula projects would have delivered power and therefore no provision was made for the extensive use of its diesel-gobbling open-cycle gas turbines (OCGTs) and STPPPs.

Following the deterioration of its generation fleet, the explosion at its Duvha plant, the collapse of the coal silo at Majuba, issues with coal quality and delays in the completion of the new build programme, the use of OCGTs and STPPPs are the only way to keep the lights on.

Eskom says the war room took the decision that it should continue to use these measures, because the cost of power interruptions to the economy is even higher than the additional costs incurred for diesel purchases and STPPPs.

The utility asks for an additional R32.9 billion for diesel and R19.9 billion for STPPPs over the next three years.

Eskom acknowledges that submitting the application this late, means it would not be able to comply with provisions of the Municipal Finance Management Act (MFMA) to table proposed bulk tariff increases to municipalities in Parliament before March 15.

It says it would have to obtain special permission from the Minister of Finance for late submission.

It asks for the cooperation of local government stakeholders to enable implementation on July 1, but says if that cannot be achieved, implementation on September 1 should be considered.

As the City of Cape Town indicated, the municipal budget cycle is far advanced and all the municipalities countrywide would have to revise their budgets as soon as there is finality regarding Eskom’s application.

Download the Submission of proposed price increase document here



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Gee, it must be great to be in the Utopia that the Eskom executives and staff inhabit hey? You are a PROTECTED monopoly, you grant insanely high salaries to your staff and on top of that you add insult to injury by dishing out mind boggling bonuses to managers who are, to put it mildly INCOMPETENT asses. (anybody know why Brian Dames got that R27m go-away package?)
Now, to further add to the unemployment in this ANC benighted little banana republic they want a 25% tariff increase IMMEDIATELY! Has the world gone barking mad? Yes it has, as their bosom buddies in the ANC appointed NERSA clique will grant their fairy god mother wish without missing a mouse click.
A further example of how utterly bereft this country is of both ethics and good managers since the start of the racist insanities of AA, BEE sweetheart deals and the general Zumafication at Megawatt Park. I await Ramaphosa’s caving-in to Eskom in the next 24 hours. War room se gat! What does the ANC’s minister of finance think is going to happen to INFLATION now with a 25% hike in power costs? Answer: Look north, and take heed Nene.

Sort out the municipalities first and the people not paying.

At this rate it won’t be long before the only jokers that rely on Eskom will be the management of Eskom and those with illegal connections. The rest of us will be off the grid, using solar. The more Eskom increase their rates, the stronger the case for solar. Solar energy is already cheaper than Eskom. These monkeys are managing themselves into irrelevance.

Where does the price increase scenario end? I`m pleased to hear tat Bobby Godsell is a member of the panel assisting the Eskom War Room. For 20 years “decay” eroded our national power facility & as usual the man (and woman) in the street are asked to pay!

So they want 25%, let them have it then when we have stage 2 or 3 load shedding they may as well have just left the tariff as it was and had no load shedding. Simple maths 101 you must pay 25% more but we will cut you off for 6 hours a day. Have always had a real problem with there model, reads like a Monty Python clip.
Good Morning, is this the electricity shop?

Yes Sir in fact it is, the only one on the street!
Lovely premises.
Yes it is rather smart, we also pay great salaries and bonuses. In fact we have just raised our prices.

Oh dear hope I can afford some electricity. Can I have some of that electricity please?

So sorry out of stock on that one.

Ok what about some of that then?

Oh dear sorry just run out on that one.

±2o years ago Eskom had its own treasury and issued its own bonds (E )in the capital market and even charged a premium on its bonds in relation to the government bonds (R) because it was so good. Today Eskom is rated “junk” by Standard and Poors- this is value destruction on an unprecedented scale. Since 1994 the ANC has hijacked every single government department and parastatal as a “jobs-for-votes-vehicle” through its policy of cadre deployment. Eskom (and every other SOE) is obsessed with making its workforce demographically representative of the country’s population. Unfortunately demographics doesn’t in itself generate the electricity which we need.The work still needs to be done.

Another R250 per month gone from my back pocket. Together with my recent spent on increased security (R8000), increase in armed response monthly fee (R80), Geyser excess that was damaged by power surge (R500), purchase of emergency lights (R1000) and the list goes on and on and on. What do I get in return from my government? Zokol.

A 25% increase in price will result in more than a 25% increase in illegal connections.

I feel sorry to my fellow citizens living in Metropolitan areas, who are getting a huge electricity bill every month. 25% increase will make it worse, seemingly at the expense of those who are connecting electricity illegal

The higher prices mean higher turn over and than means bigger bonusse for management.

What’s effectively happened here is that Eskom has been placed under administration due to being insolvent after having been run into the ground by incompetent management. In simple terms the business is bankrupt. The kamstige “war room” is now trying rescue this dead duck with their awesome experience and skills. Good luck duck.

Thank you Davebee, excellent comment. Three thoughts: 1. Guess which finger I’m saluting E$%#@ with and 2. well if Soweto doesn’t have to pay then why must the rest of us. 3. What’s the extra 3.5c/kw to be imposed by nene during the budget for then = less business + less production = more unemployment (+10% – 20%). So then where’s the extra 25% then going to be earned from and the taxes for all the additional 18 to 21 year old government grant receivers?

It seems through total mismanagement of resources Escom is having to rely heavily on expensive diesel powered generators. How suspicious is it that this diesel is being purchased through black empowerment intermediaries who are fast becoming extremely rich. Another example,of the hellish Zumarism that is fast destroying this country.

We all know the problem and it is plain and simply that the 20 year TRANSFORMATION nightmare has finally climbed out of the Eskom wardrobe and is now in our collective faces, big time.
I have been suggesting the following solution to the funding disaster at Eskom for the past five years yet it is totally ignored even by the DA.
Add a 1.5% ring fenced ‘Eskom Tax’ to the current 14% Vat, the 1.4% can then cover the much needed bridging to get this current gang out of the board room and upper management until we install a competent and independent team to replace the usual-suspect ANC Biznessmen at Megawatt Park.
A ring fenced Eskom Tax would be efficient, DEMOCRATIC and transparently fair as it would include EVERYONE in its net and not just the poor suckers who have a meter at their front gate or business premises.
Can I get a couple of accountants or electrical engineers to tell me I’m wrong in this approach? I would be grateful to know if they could fault my common sense suggestion.

Read this article on Netwerk 24

Eskom is selling less electricity than ten years ago, but they’re paying a lot more for their (BEE?) coal. Their workforce also increased from 11515 to 46919 in the last six years

“Die onderliggende probleem is dat Eskom minder elektrisiteit verkoop as ’n dekade gelede.”

“Verlede jaar is bereken dat Eskom se rekening vir steenkool in die ses jaar tot 2014 van R19 miljard tot R70 miljard per jaar toegeneem het.”

“In dié tydperk het Eskom se getal werknemers van 11 515 tot 46 919 toegeneem, het Myburgh gesê”

Eskom staff increased from 11515 to 46919 in the last six years, yet they’re selling less electricity than a decade ago.

Their coal cost went up from R19 billion to R70 billion, no doubt due to inflated prices from BEE parasites supplying it

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