Embattled power utility Eskom announced an increase for the price of electricity from April 1, 2021.
This comes after the National Energy Regulation of South Africa (NERSA) made three key decisions:
– An amount of R13.2-billion of efficient costs incurred by Eskom during the Financial Year (FY) 2019 will be recovered in FY 2022 (R6.6bn) and FY 2023 (R6.6bn). Eskom had requested that the full amount be recovered in FY 2022.
– Two decisions were reached on Eskom’s FY 2019 supplementary application made in accordance with the High Court judgment and order
“All three decisions refer to costs that have been determined to be efficient by NERSA. The efficient costs have been incurred between FY 2015 to FY 2019, which Eskom can only recover at the earliest in FY 2022,” said Eskom in a statement.
This might imply a delay of up to 7 years. And if it goes ahead, NERSA will allow the recovery of these costs in FY 2022. This is meant to allow the smooth flow of the tariff increase and minimise burden on the Government.
“It is best to enforce the “User Pay” principle, where the consumer of electricity pays for the efficient cost of electricity. The efficient costs do not go away. Eskom is required to depend on more and more debt as well as further equity support from Government to continue to provide the electricity service. Thus, the consumer is continued to be provided a subsidy funded by the taxpayer, which has a negative impact on other Government’s priorities.”
“The extent of the increase is yet to be determined by NERSA and it is hoped that this will happen by the end of February 2021,” Eskom general manager for regulation Hasha Tlhotlhalemaje told Moneyweb.
Indigent South Africans will be protected from these increases.