Eskom tariff hike permission deepens South Africa woes

The National Energy Regulator of SA (Nersa) permission to Eskom to hike tariffs in April next year has been described as such that may worsen the woe of South Africa’s economy, a move that analysts said could see electricity rising by between 10 and 19.4 percent increase next year.



Nersa said it had approved Eskom’s liquidation of the Third Multi-Year Price Determination (MYPD3) Regulatory Clearing Account (RCA) balances for the 2014/15, 2015/16 and 2017/18 financial years over a four-year period. 

Nersa has granted Eskom a 4.1 percent increase effective April next year under the regulatory clearing account. Eskom has also applied for a 15 percent tariff increase, which Nersa is considering, although the actual increase – which will come into effect in April next year – could be higher or lower.

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The move comes as the cost of fuel, one of the major factors stalling economic growth, went up yesterday, heralding a litany of other associated price increases in the food basket, energy mix and inflationary pressures.

“The impact will be very significant; consumers can expect at least a double inflation increase next year, it will certainly tip over the inflation rate,” energy analyst Chris Yelland said..

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Nersa awarded Eskom the green light to raise tariffs and to recover R31.1 billion of the R66.6bn the power utility applied for, to recover its costs for the period in the next four years.

The Energy Intensive Users Group of Southern Africa (EIUGSA), whose members account for about 40 percent of electrical energy consumed in the country warned that increases in electricity tariffs would exacerbate Eskom’s “death spiral”.  

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