The National Energy Regulator of SA (Nersa) should decline any more tariff increases for Eskom in 2015, the Democratic Alliance said on Monday. Nersa confirmed Eskom was formalising an application to reopen the multi-year price determination, allowing for a further increase in electricity tariffs, DA MP David Ross said. The application was done in consultation with national treasury and the SA Local Government Association.
“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,” Ross said in a statement.
Ross said he would write to Finance Minister Nhlanhla Nene to request that he declines Eskom’s application for a further tariff hike.
“On Friday last week, Eskom stated that electricity tariffs will increase 12.69 percent for direct customers and 14.25 percent for municipalities from July this year,” said Ross.
“This far exceeds the eight percent annual tariff increase Nersa initially agreed to as part of the multi-year 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”.
On Saturday, Eskom warned consumers that its new tariff hikes would take effect on April 1.
“Eskom confirms that the price increase to be implemented on 1 April 2015 to Eskom direct customers is still 12.69 percent and for municipalities will be 14.25 percent from 1 July 2015, as approved by the National Energy Regulator of South Africa (Nersa) during November 2014.”
In recent months, Eskom has battled to keep the lights on since the collapse of one of its coal storage silos, diesel shortages, and maintenance issues.
The power producer said that in part due to a history of non-cost reflective tariffs, it was unable to pre-fund costs necessitated by a constrained power system.
Such expenses included short-term power purchases from independent power producers and municipal generators, as well as increased use of open cycle gas turbines.
Because of these constraints, Eskom had been forced to explore options for further review of tariff increases for the 2015/16 financial year, it said on Saturday.
“Submissions in terms of the Multi-Year Price Determination methodology have been made to Nersa in this regard.”
National Treasury has promised Eskom R20 billion to help its recovery.
On Monday, the Cape Chamber of Commerce and Industry said the tariff increases would not save Eskom unless the power utility came “to grips with costs that appear to be rising out of control”.
“A quarter of Eskom’s generating capacity is off-line undergoing maintenance or being repaired after breakdowns yet the costs continue to rise,” chamber president Janine Myburgh said in a statement.
She said that over a period of six years, primary energy costs — mainly coal — increased from R19 billion to R70 billion. This was an annual increase of 24.3 percent.
“We need to ask some serious questions about these costs because there are allegations that Eskom is paying something like four times the going rate for coal from some BEE companies.”
Myburgh said that the chamber had always supported BEE and understood that there would be additional costs from smaller suppliers, but said it should be kept within reasonable limits. She said the best way to do this was to be transparent about the prices. SAPA