Eskom still weighing tariff increases

2012-08-21 14:38

Eskom is mulling the wisdom of demanding tariff increases that will make the electricity price fully cost-reflective in five years, the utility said.

“That is what we in Eskom are discussing at the moment,” finance chief Paul O’Flaherty said on the sidelines of a briefing to Parliament’s portfolio committee on energy today.

“We have to balance the reality of the economy versus what Eskom needs.”

The utility is due to submit its final tariff increase application to national regulator Nersa at the end of August, after receiving comment from National Treasury last month.

O’Flaherty said at the moment the average price per kilowatt hour was 60 cents but it needed to be 90 cents to cover the cost of Eskom’s expansion programme and interest of about 10% on borrowings set to reach R350 billion by 2015.

In response to questions from MPs, O’Flaherty was adamant that Eskom had to raise the required cash from the electricity price.

“Who is going to pay for it if it is not in the tariff?” he asked.

Following electricity price increases of 31% in 2010, and then 16% in the past two years, Eskom’s next tariff hikes are anxiously awaited.

The utility has refused to comment on reports that leaked documents reveal it will now demand yearly increases of between 14.6% and 19%.

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