Eskom seeks to recoup R38bn through tariff hikes

Electricity costs
Electricity costs
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Johannesburg - State power utility Eskom has asked the national energy regulator Nersa for permission to recoup R38bn of costs incurred in its 2014 financial year through higher electricity tariffs starting April 1 next year.

“If approved, the outcome of this application is expected to impact the electricity price commencing in 2016-17,” acting chairperson Ben Ngubane said in the company’s annual report, released on Tuesday.

The regulator in June rejected a request by Eskom, which is struggling to meet demand in Africa’s most-industrialised economy, to raise prices by as much as 25% for the year to March 2016. The additional funds would have been used to buy power from independent producers and for diesel to fuel generators the utility uses to curb scheduled blackouts.

Electricity prices in South Africa have almost quadrupled since 2007, when the country first had power shortages. Scheduled supply cuts, known as load shedding, have taken place almost once every two days on average this year.

In October, the regulator gave Eskom permission to raise tariffs by an average 13% from April 1, 2015, more than the 8% initially approved, to help the utility recover R7.8bn of unbudgeted costs for the three years through March 2013. The company had applied to recover R18.4bn.

Eskom has struggled to finance new generating capacity and is battling to meet demand after delays in building new power stations and as aging plants suffer from breakdowns.

Kusile, which will have 4 800 megawatts of capacity, making it Africa’s biggest coal-fired power plant when completed, will be fully operational in 2021, while the 4 764-megawatt Medupi facility will be ready in 2019. Both were to be completed by 2018, the company said in 2012.

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