By Lehlohonolo Lehana.
The National Energy Regulator of SA (Nersa) confirmed that the 18.65% increase for this year will go ahead, although with 18.49% jump for municipalities, and only a 10% increase for poorer households.
The increase for Eskom’s standard tariff customers will be effective from 1 April 2023 and for municipalities from 1 July 2023.
Nersa said that key industrial and urban customers would realise an 18.65% increase and an additional 7.37c/kWh to cater for the subsidy, which increases from 5.69c/kWh resulting in a 29.53% increase.
Municipalities will experience a slightly lower hike at 18.49% because they will not experience an increase in the first three months (April to June) of Eskom’s financial year – their financial year starts on 1 July.
The regulator added that tariffs exclude value-added tax (VAT) as the Minister of Finance Enoch Godognwana determines the rate.
“The Minister of Finance last proclaimed a VAT increase in 2018, from 14% to 15%,” said Nersa.
Eskom will ensure that its approved Schedule of Standard Prices for 2023/24 is published on its website and communicated to all customers, it added.
Nersa’s proposed increase faced major public backlash from already cash-strapped South Africans who have experienced restricted access to electricity. Load shedding has been implemented every day this year so far. South Africa has been in a near-permanent state of load shedding since September 2022.
The hike has also been widely rejected as unaffordable by municipalities, businesses and even president Cyril Ramaphosa. The president even went so far as to suggest that Eskom and Nersa delay or stagger the increase to ease the burden on South Africans at large.
However, the Nersa approval is final and can only be undone through legal processes. The president subsequently walked back on his comments, acknowledging the regulator’s independence.
Eskom has welcomed the hike, even though it was far below its application of 32%. The embattled power utility said that tariffs need to reflect the cost of producing electricity, as this is essential for the company to resolve its financial issues and to service its debt and take on critical maintenance.