I have confirmed today with the National Energy Regulator of South Africa (NERSA) that Eskom is formalising an application in consultation with National Treasury and South African Local Government Association (SALGA) to reopen the multiyear price determination, allowing for a further increase in electricity tariffs.
NERSA confirmed today that the application was due on the 15 March, but the Minister of Finance could grant an exemption to accommodate implementation in the current financial year.
I will today write to the Minister of Finance, Nhlanhla Nene, requesting that he declines any application by Eskom for a further tariff hike.
On Friday last week Eskom stated that electricity tariffs will increase 12.69% for direct customers and 14.25% for municipalities from July this year. This far exceeds the 8% annual tariff increase Nersa initially agreed to as part of the multiyear price determination to March 2018.
South Africans simply cannot afford further increases to the electricity price, especially not to bail out an ailing State Owned Enterprise.
It is reported that Eskom’s latest request is for a 25.3% price increase, which would be triple what was agreed to in the multiyear price determination.
The increase will help pay for diesel to run Eskom’s open-cycle gas turbines, as well as to continue paying independent power producers – most of whose contracts expire next week.
It is therefore essential that the Minister does not entertain an application, nor grant an exemption to Eskom that would empower a reopening of the price determination process.
By making consumers pay for Eskom’s legacy of poor planning is both unethical and economically senseless.
Minister Nene must therefore resist any application actioned by Eskom.
David Ross
Shadow Deputy Minister of Finance