Eskom gets green light to hike tariffs by over 15%

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SA is set to see electricity prices rise sharply following protracted legal wrangling between Eskom and the regulator.

In a judgment dated 15 February 2021, the Gauteng High Court ruled that R10 billion should be added to Eskom's allowable revenue in the 2021/22 financial year.

Additionally, Eskom can increase tariffs by nearly 16%. According to the order by Justice Joseph Raulinga, 5.44c/KWh can be added to the average standard tariff. Eskom customers will therefore pay 132.2c/kWh, which amounts to an increase of 15.6%.

Each party was ordered to pay their own costs.

The latest ruling follows Eskom's court application to recover R23 billion in the 2021/22 financial year. A High Court judgment in July last year ruled in the state-owned power company's favour.

On Tuesday afternoon, Nersa said the court order had come on the back of discussions and an agreement between itself and Eskom.

But, it added, it would still proceed with an appeal that is already in motion at the Supreme Court of Appeal.  

In a statement issued on Tuesday evening, Eskom said chief financial officer Calib Cassim had welcomed the decision. The ruling would lessen Eskom's reliance on government support, the utility added.

"This court decision allows Eskom to recover efficiently incurred costs for the production of electricity. It also contributes to the 'user pay' principle and is likely to lessen the financial burden of supporting Eskom on the government, releasing the government to focus on other priorities.

"Implementation of the order will allow Eskom to move towards addressing some of the revenue shortfalls and enable Eskom to recover prudently incurred costs for the production of electricity, which will help to improve Eskom’s financial sustainability."

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