Electricity prices to increase by 9.41%, says Nersa

The National Energy Regulator of South Africa has approved electricity hikes of 9.41%, 8.1% and 5.2% for the next three financial years, far below Eskom’s application for double-digit tariff increases.

Nersa made the announcement on Thursday in Pretoria following Eskom's application for price hikes of 17.1% for 2019/20, 15.4% for 2020/21 and 15.5% for 2021/22.

The requested increases were largely opposed by business, labour and civil society in written and oral submissions.

Nersa chairperson Jacob Modise said the regulator received 119 000 written comments on Eskom’s application and held public hearings in seven out of the nine provinces.

The Minerals Council of SA warned that the energy-intensive mining industry could shed 150 000 jobs if the Eskom application was granted.

Earlier, Nersa said in an emailed response to Fin24 that the recent spate of load shedding in November, December and February would be considered and adjustments made "where necessary".

Eskom has previously blamed plant maintenance and breakdowns as well as delays in the completion of new power stations for the rolling blackouts.

The regulator also previously confirmed that the decision to separate Eskom into three seperate entities - generation, distribution and transmission - would not affect its price determination.

The increases for the next three years are on top of the 4.41% hike, approved by Nersa in October, on Eskom's Regulatory Clearing Account (RCA) application. The RCA refers to funds Eskom can recover due to an electricity shortfall or an escalation in operating costs.

Eskom will also be allowed to 'claw back' R3.86bn from its RCA for 2017/2018, Nersa said and further details of this will be announced soon

Eskom, which is R420bn in the red, received a lifeline in the February budget speech of R23bn every year, for the next three years from National Treasury.

The power utility projects a R20bn loss for year end March and warned of further losses in the next financial year, even if the full tariff application is granted.

Nersa has previously rejected Eskom’s applications for big tariff hikes. In December 2017, the regulator denied a 9.9% tariff hike application and instead approved only 5.23%.

Modise apologised for the more than one hour delay to the start of the briefing. The regulator held a meeting on Thursday morning with the electricity sub-committee and there was extensive debate at the meeting and they went overtime.

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