Eskom is relying on its cash-strapped customers to support the failing utility, the Organisation Undoing Tax Abuse (Outa) has warned, after the parastatal hiked electricity prices by 18.65% this week.
Outa said there was “no escape” from spiralling electricity prices and load-shedding, as customers were expected to “shore up” the failed electricity utility. Eskom is also under pressure to improve its energy availability factor (EAF) to above 65% to meet the National Energy Regulator of South Africa’s (Nersa) conditions.
Eskom’s prices would go up 18.65% on April 1 for standard tariff customers, Nersa announced on Thursday, while the country remained in stage 6 load-shedding. Nersa declined Eskom’s request for a 32% price increase in its application to the regulator.
The latest price hike will impact Eskom’s direct customers, which include municipalities that will clarify their increases to take effect from July1.
Nersa, which in recent years has kept Eskom’s requests for hefty double-digit price hikes at bay, granted Eskom about 90% of the allowable revenue it had requested. Nersa said that even at 12% Eskom would need to loadshed and ordered it to improve energy availability.
“Outa is outraged at government’s failure to help South Africans to weather this storm. In effect, the failure of government to fast track the Independent Power Producer Procurement Programme has meant that excessive diesel is being consumed as Eskom is trapped in almost full-time use of the OCGTs (Open Cycle Gas Turbines) to reduce load-shedding,” said Liz McDaid, Outa’s parliamentary and energy adviser.
She said it was encouraging that Nersa was pushing Eskom to improve energy availability.
“Nersa is driving in the right direction by pushing Eskom to fix its own house and should be commended for that,” she said.
However, this was insufficient to end the electricity crisis as corruption had added to the breakdowns at coal power stations, she added.
“We also need a forward-looking energy minister who sees the value of renewable energy and fast tracks its implementation to get affordable energy onto the grid.”
Nersa granted an average increase of 18.65% for standard tariff customers in April, so the price goes from 146.48c/kWh (2022/23) to 173.80c/kWh, and then another 12.74% in April 2024 to 195.95c/kWh. This is linked to an allowable revenue rising from R249.726 billion for the current year to R318.922bn for 2023/24 and R352.166bn for 2024/25. The allowable revenue for 2023/24 and 2024/25 includes court-ordered additions of R15bn each year to refund the government bailout which Nersa had previously illegally deducted, and regulatory clearing account (RCA) amounts.
In September, Outa made a formal submission to Nersa to oppose Eskom’s price application, calling for Nersa to grant a maximum of a consumer price index (CPI) tariff increase. Outa said the increase was “way beyond” CPI and unaffordable for most consumers.
