Eskom price increase to implemented in April

By Drum Digital
21 March 2015

Eskom warned consumers on Saturday that its new tariff hikes will soon take effect.

"Eskom confirms that the price increase to be implemented on 1 April 2015 to Eskom direct customers is still 12.69 percent and for municipalities will be 14.25 percent from 1 July 2015, as approved by the National Energy Regulator of South Africa (Nersa) during November 2014."

In recent months, Eskom has battled to keep the lights on since the collapse of one of its coal storage silos, diesel shortages, and maintenance issues.

The power producer said that in part due to a history of non-cost reflective tariffs, it was unable to pre-fund costs necessitated by a constrained power system.

Such expenses included short term power purchases from independent power producers and municipal generators, as well as increased use of open cycle gas turbines.

Because of these constraints, Eskom had been forced to explore options for further review of tariff increases for the 2015/16 financial year.

"Submissions in terms of the Multi-Year Price Determination methodology have been made to Nersa in this regard."

Finance Minister Nhlanhla Nene's announcement in his Budget Speech of a proposed environmental levy increase, yet to be promulgated, could have further implications for power pricing.

"...As such Eskom will need an adjustment in terms of the tariffs due to the levy."

On Thursday, Standard & Poor's rating agency downgraded Eskom's long-term credit rating to BB+, from BBB-, following the suspension of four of its senior officials.

National Treasury has promised Eskom R20 billion to help its recovery.

Source : Sapa

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