Published: Fri, March 08, 2019
Finance | By Loren Pratt

Eskom increase may dim a good inflation outlook

Eskom increase may dim a good inflation outlook

City of Johannesburg Mayor Herman Mashaba said today that the tariff increases granted to Eskom over the next three years by the National Energy Regulator of South Africa (Nersa), were rewarding corruption.

Nersa had earlier in the day granted Eskom hikes of 9.41%, 8.1% and 5.2% for the next three financial years.

The decision comes after Nersa held a number of public hearings in seven provinces that it said were well attended.

Nersa chairperson Jacob Modise defended the determination saying it seeks to balance the interests of the energy producer on the one hand and those of consumers on the other.

Energy regulator Nersa yesterday granted cash-strapped Eskom above-inflation power price hikes over the next three years, but the increases were far below what the utility had asked for.

After considering all arguments during the public hearings, it's ultimately up to Nersa to make the final decision.

"We were dealing with a lot of information and submission from the public all of which had to be included, and we are satisfied that we reached the right decision", said Modise.

Nersa grants Eskom price hikes: Here's how much more you will pay over next 3 years

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.

In its MYPD4 submission, Eskom requested allowable revenue of R219-billion for 2019/20, rising to R252-billion in 2020/21 and R291-billion in 2021/22, which, if granted, would have translated to increases of 17.1% for 2019/20, 15.4% for 2020/21 and 15.5% for 2021/22.

The tariff increase, if granted, will come on the back of a hefty petrol price hike this week, placing a further burden on already struggling consumers.

The regulator said as part of its decision on Eskom's tariffs it would also subject Eskom to "extensive prudency reviews, efficiency tests and performance thresholds".

Increases for municipal customers will follow on July 1, with adjustments to cater for the three-month lag during which municipalities are unable to pass on the higher Eskom tariffs to customers.

A previous version of the story stated that Eskom was allocated R69m over the next three years in the 2019 budget; that figure has been corrected to R69bn.

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