Consumers will be facing a dilemma, with the new increment, as this will translate to a heavier tax burden.
Also, Energy regulator Nersa has published the outcome of its public consultations on Eskom’s request for tariff hikes.
At a press briefing on 7 March 2019, the regulator said that it had granted Eskom the following tariff increases over the next three years:
- 9.41% or allowed revenue of R206.34 billion for 2019/2020.
- 8.10% or allowed revenue of R221.8 billion for 2020/2021.
- 5.83% or allowed revenue of R233.1 billion for 2021/2022.
This year’s price increase will kick in on 1 April.
In determining the hike, Nersa said it considered Eskom’s regulatory asset base, weighted average cost of capital, expenditure, IPPs, depreciation, R&D and levies and taxes, and other factors.
The granted hikes equate to a 25.2% increase over the next three years.
The increase is in addition to a 4.41% price increase which had already been granted to Eskom by Nersa as part of its Regulatory Clearing Account (RCA) grant.
Eskom pleaded with Nersa, and South Africa, to allow the price hikes – saying that it was losing R500 million every month.
According to Eskom CFO Calib Cassim, Eskom needs R200 billion a year to operate. It would also lose R2 billion for every 1% of the requested hike that Nersa would not grant it.
He said that unless Eskom can make more money through sales, from higher tariffs, even if it gets another R100 billion bailout from government it will just get wiped out by debt servicing.
The power utility conceded that it was not the public’s fault that it was in crisis, but appealed for help to bail it out nonetheless.
The DA has condemned the hikes, however.
It said the country is under pressure from increasing fuel costs, and South Africans are struggling under a “weight of tax burdens placed on it through ANC mismanagement, collusion, corruption, and wastefulness in our state-owned entities, departments, and municipalities”.
“This large increase in the electricity tariff will eat into the already diminished incomes of the poor and lower-income groups. Over a period of 10 years, from 2007 to 2017, Eskom’s electricity prices have increased by about 356%, whilst inflation over the same period was 74%,” said the DA.