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NERSA approves 5.23% electricity tariff increase

Date: 23 December 2017 By: Andries van Zyl

Good news for consumers is that the National Energy Regulator of South Africa (NERSA) did not approve Eskom’s attempt to implement a 19,9% average price increase.

Instead, NERSA announced on Friday that it had approved Eskom’s allowable revenue of R190.348 billion for the 2018/19 financial year, instead of the R219.514 billion initially asked for by Eskom. “The approved allowable revenue of R190.348bn will result in an average percentage price increase of 5.23%,” said NERSA in a press release.

NERSA further decided that the allowed revenues must be recovered from Eskom’s standard and non-standard tariff customers (NPAs and international customers), based on the previously approved tariff principles and structures, using the Eskom Retail Tariff Structural Adjustment (ERTSA) methodology as approved by NERSA.

 NERSA said they had followed due regulatory processes in considering Eskom’s revenue application for 2018/19. “On 13 September 2017, Eskom’s application was published on NERSA’s website, along with an invitation to stakeholders to submit written comments. A total of 23 000 written comments were received from stakeholders, consisting of comments from private individuals, small users, intensive energy users, non-government organisations (NGOs) and environmental activists, as well as local government and other stakeholders,” said NERSA.

The comments NERSA received, included the view that Eskom is going to see a continuous decrease in sales volume as consumers transition to more affordable alternatives. Some stakeholders recommend the decommissioning, mothballing or cold reserve of older, less efficient (in terms of emissions and operationally) power stations. Another comment was that, due to decreasing electricity demand, Eskom is incurring increased coal costs as it needs to buy expensive short-term coal contracts rather than committing to long-term coal contracts. Most coal contracts are such that Eskom has to pay for the coal, irrespective of whether it is used or not. There was also a major concern over Eskom’s Capital Expenditure (CAPEX) programme, which has escalated exponentially since its inception and which is caused mainly by the Medupi, Kusile, and Ingula projects. Such rapid escalation requires a serious revaluation. “The demand for electricity is not expected to increase, therefore any further capital expansion programmes are unnecessary. Eskom’s application of R77 billion for CAPEX in 2018/19 is excessive – it is one third of Eskom’s annual income,” was one of the conclusions NERSA came to regarding the comments.

In addition to publishing Eskom’s application for comments, NERSA said it had also conducted public hearings in eight provinces of South Africa from 30 October to 22 November 2017. “The public hearings afforded interested and affected stakeholders the opportunity to submit their views, facts and evidence. A total of 96 oral presentations were made. The Energy Regulator appreciates and encourages stakeholder participation in its decision-making processes and would like to thank all stakeholders for their valuable comments and input,” said NERSA.

 
 
 

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Andries van Zyl

Andries joined the Zoutpansberger and Limpopo Mirror in April 1993 as a darkroom assistant. Within a couple of months he moved over to the production side of the newspaper and eventually doubled as a reporter. In 1995 he left the newspaper group and travelled overseas for a couple of months. In 1996, Andries rejoined the Zoutpansberger as a reporter. In August 2002, he was appointed as News Editor of the Zoutpansberger, a position he holds until today.

 
 

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