South Africa to Face Yet Another Increase in Electricity Tariffs

Image sourced from International Atomic Energy Agency

South Africa is expected to face another increase in electricity tariffs from state-owned sole electricity supplier Eskom from April 2022. This latest round will see tariffs increase by 9.61%, according to the National Energy Regulator of South Africa (NERSA).

However, the regulator has warned that this increase is simply “indicative” and the actual price must still be finalised.

According to Media24, the tariff increase is made up of a nominal 3.49% for the 2022/23 year as well as legacy decisions from previous years, bringing up the increase to 9.61%. Eskom had asked the state for a 20.5% increase, including the previous allowable revenue. Eskom argued that most of the cost increase was driven by two factors outside of the firm’s control, namely the requirement to increase purchases of energy from independent power producers and the increase in carbon taxes.

The tariff goes up on 1 April for Eskom customers and 1 July for municipal customers. Municipalities will also likely add a surcharge for their customers, according to Media24. NERSA had informed Eskom well after the application had been

In December, Eskom approached a court and secured an order that Nersa considers the 2022/23 application immediately to put new tariffs in place by 1 April. The entire situation has been undergoing a sustained back-and-forth with NERSA informing Eskom that it intended to change the methodology for determining allowable revenue in September, well after the utility had completed its application. Eskom, therefore, required to create a new application

In December, Eskom then approached a court and secured an order that NERSA considers the 2022/23 application immediately to put new tariffs in place by 1 April.

“The financial implications of this decision on Eskom’s long-term sustainability will need to be further understood. It is understood that Nersa considered the impact on consumers and the financial sustainability of Eskom as it made its decision,” said Calib Cassim, Eskom’s CFO.

Cassim added that the Eskom board would “deliberate further” in their decision to “continue to sustainably provide electricity to the extent possible in the context of this revenue decision”.

Edited by Luis Monzon
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