Struggling power utility Eskom has welcomed the electricity tariff hike as a move that will help to shore up its perpetually constrained finances.
This comes after the National Energy Regulator of South Africa (Nersa) yesterday granted Eskom a 18.65% electricity tariff increase for the 2023/24 financial year and 12.74% for 2024/2025 financial year.
The regulator approved allowable revenue of more than R318 billion and R352bn for the FY2023/24 and FY2024/25, respectively, after considering adjustments for inefficiencies and prudency reviews, and factoring the Regulatory Clearing Accounts.
Nersa said its decision reconsidered capital related costs for Eskom when compared to the previous decision, which would significantly contribute to allowing for Eskom to recover costs related to debt commitments.
In a statement today, Eskom said it appreciated the tough decision made by Nersa for these financial years revenue determinations.
Eskom’s chief financial officer Calib Cassim said the utility noted the decision by Nersa and recognised the pressures this determination will place on consumers.
“This decision will positively contribute from a financial and sustainability point of view,” Cassim said.
“The revenue determination of R319 billion and R352 billion for the financial years 2024/5 will allow a further migration towards a price level that reflects the efficient cost of producing electricity.”
In July 2022, the High Court ordered Nersa to undertake the necessary regulatory steps to
assess, consult and make a determination on Eskom’s FY2024 and FY2025 Multi-Year Price Determination (MYPD) Application.
Eskom further noted the tempering of the volume of diesel for the operation of open cycle gas turbines to a load factor of 6%.
It said that it was evident that both it and Nersa were aligned that every effort needs to be made to improve the energy availability factor at Eskom power stations.
Eskom said the shortage in capacity due to both its performance and the delays in the Independent Power Producers projects needed to be addressed.
Meanwhile, Nersa’s tariff hike decision did not go down well with many sections of society amidst the rising cost of living and elevated unemployment levels.
The Consumer Goods Council of South Africa (CGCSA) said these tariff increases will add more operational costs to companies in the consumer goods sector which are already battling with the financial impact of load shedding.
“CGCSA is calling for more operational stability and efficiency at Eskom by ensuring that it accelerates plans to restore generation capacity and improve availability of electricity.
“The tariff increases should be accompanied by a demonstrated commitment to deal effectively with the problems facing Eskom.
“In this regard, we expect Eskom to take us into its confidence about a clear and measurable roadmap to improve the reliability of power supply in the country.”
Eskom apologised for the severe extent of loadshedding which has been ramped up to Stage 6 indefinitely.
“The impact on individuals and businesses is understood. The minimising of loadshedding is the highest priority for Eskom and continuous focus at all levels in the organisation is being given,” Eskom said.
BUSINESS REPORT