The National Energy Regulator of South Africa (NERSA) has granted Eskom an 18.65% tariff increase, which will take effect from April 2023.
This is remembering that Eskom had initially requested a 32% tariff hike.
Announcing its decision on Thursday afternoon, 12 January 2023, NERSA said the 18.65% increase was based on its approved tariff of 146.48c/kWh in the 2022/23 financial year.
“The NERSA-approved revenue is R334bn for the 2024/25 financial year, which translates to a tariff of 195.95c/kWh, resulting in a 12.74% increase based on the tariff of 173.80c/kWh NERSA approved tariff for the 2023/24 financial year,” the regulator added.
The decision, said NERSA, was based on the information at its disposal and the analysis of Eskom’s fifth Multi-Year Price Determination (MYPD5) revenue application for the 2023/24 and 2024/5 financial years.
NERSA spokesperson, Charles Hlebela, in a statement said: “The allowable revenues must be recovered from both Eskom standard and non-standard tariff customers (Negotiated Pricing Agreements and international customers) based on the previously approved tariff principles and structures using the Eskom Retail Tariff Structural Adjustment (ERTSA) Methodology, as approved by NERSA.”
He further said Eskom’s application for the 2023/24 financial year’s revenue was R351 billion, including Regulatory Clearing Accounts (RCAs) and court orders.
Additionally, NERSA pointed out that its approved allowable revenue is R318 billion after considering adjustments for inefficiencies and prudency reviews.
“For the 2024/25 financial year, Eskom applied for revenue of R381 billion, including RCAs and government injection, as per the court order. The NERSA-approved revenue is R352 billion after considering adjustments for inefficiencies and factoring the RCA as per the Energy Regulator decision of 14 December 2022,” elaborated NERSA.
NERSA approved a total revenue of R300 billion for the 2023/24 financial year, which translates to a tariff of 173.80c/kWh.
“The NERSA-approved revenue is R334 billion for the 2024/25 financial year, which translates to a tariff of 195.95c/kWh, resulting in a 12.74% increase based on the tariff of 173.80c/kWh NERSA approved tariff for the 2023/24 financial year,” the regulator said.
This means customers will find themselves paying a tariff of R1.73 per kilowatt in the 2023/24 financial year, up from R1.46 per kilowatt.
The Energy Regulator said it would consider the ERTSA for the 2023/24 financial year following the submission of an application by Eskom.
NERSA said it would subject all customer costs to further extensive prudency reviews, efficiency tests and performance thresholds.
The Energy Regulator said, “It is important to note that Eskom’s revenue application for the 2023/24 and 2024/25 financial years was considered against various challenges that are affecting the South African economy. Accordingly, the Energy Regulator’s decision provides a balance between the sustainability of Eskom and the economic well-being of the consumers and the economy,” it said.
Adding to this, Eskom said it appreciated the tough decision made by NERSA, while recognising the pressures the determination puts on consumers.
The power utility said once the Energy Regulator made its decision on the restructuring of tariffs, these decisions would then see Eskom be able to apply the tariff adjustments to its customers from 1 April 2023.
Eskom’s Chief Financial Officer Calib Cassim said, “Eskom notes the decision by NERSA. This decision will positively contribute a financial and sustainability point of view. The revenue determination of R319 billion and R352 billion for the financial years 2024/5 will allow a further migration towards price level that reflects the efficiency of producing electricity.”
With a substantial hike in electricity tariffs expected, what are your thoughts on the above-mentioned? Share your views in the comment section below.
