By Lehlohonolo Lehana.
The National Energy Regulator of South Africa (Nersa) has approved a 9.6% tariff increase for Eskom.
In a presentation on Thursday (24 February), the national energy regulator’s chairperson Nhlanhla Gumede said this figure constitutes a 3.49% increase for the 2022/23 year, alongside legacy costs from previous years.
Gumede said this increase was decided on to balance the interests of the economy, consumers, and the utility. The price hikes will take the average electricity tariff in South Africa from just over R1.33 per kWh to around R1.46.
The increase will take effect from 1 April 2022 for Eskom customers. This is separate from the increase that municipal customers can expect to pay which will take effect from 1 July 2022.
Eskom had pushed for a 20.5% tariff increase for the 2023 financial year, warning that the hike is necessary for the continuation of its operations.
The power utility said the increase was partly being driven by purchases from independent power producers (IPPs) and carbon taxes – two costs that are outside of Eskom’s direct control. These two costs alone make up around 13.8% of the requested increase, it said.
The group has also indicated that it plans to ask for a further 15.07% increase in 2024 and a 10% increase in 2025. However, this will depend on the actual increase that Nersa grants Eskom this year, with the regulator rarely giving the power utility the full increase that is asked for.
On 5 March 2021, Nersa approved a hike of 15.06% for Eskom’s direct customers, which was subsequently implemented on 1 April 2021. A hike of 17.80% for municipalities was implemented on 1 July 2021.
Over and above the requested tariff increase, Eskom said it is still dependent on further equity support provided by the government to remain a going concern.