Eskom has welcomed the latest electricity tariff increase approved by South Africa’s National Energy Regulator (Nersa).
On Thursday, Nersa announced that it has increased electricity tariffs by 18.65% for Eskom in the 2023/2024 financial year.
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The regulator gave Eskom another 12.74% for the 2024/2025 financial year.
The above will see Eskom customers paying a tariff of R1.73 per kilowatt (kW) in 2023/24, and will then pay R1.95 per kW in the next financial year.
The increase will be effective from April 1 this year.
‘Tough decision’
In a statement on Friday, Eskom noted and appreciated the “difficult decision” taken by Nersa to raise electricity prices, adding that it “understands the pressure it will put on consumers”.
The power utility said Nersa’s decision, which angered South Africans and political parties, would “contribute positively from a financial and sustainability point of view”.
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“The determination of R319 billion and R352 billion in revenue for the 2024/2025 financial year will allow further migration to price levels that reflect the efficient cost of generating electricity,” said Eskom’s Chief Financial Officer (CFO) Calib Cassim.
Eskom initially applied for a 32% tariff increase in June 2021, with a total recovery of R351 billion for the 2023/2024 financial year, and an additional 22.52% for 2024/2025.
The ailing power utility also wants to recoup R381 billion in the next financial year.
Eliminate the burden
Eskom also acknowledged the impact of load shedding on consumers and businesses, with South Africa currently at stage 6.
He said reducing load shedding was “a top priority for Eskom”.
“Continuous focus at all levels in the organization is warranted.”
According to Eskom, the ongoing burden the country is experiencing is due to Eskom’s poor performance and unexpected delays in independent projects (IPPs).
“[This] must be resolved,” said Eskom on Friday.
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Earlier on Thursday, Nersa expressed concern over Eskom’s operations saying the electricity utility “cannot be efficient”.
The regulator also asked what would happen if Eskom was unable to meet its energy production targets.
“It would be irresponsible for the electricity utility to say that the plant is not working. This plant must be brought back on line. If Eskom fails to operate the plant, then it must be able to correct the problems it is facing.
“Eskom must meet the loss target, which means that now the utility must reduce unplanned capacity losses to 20% in 2023/24 and 18% in 2024/25. This is non-negotiable,” said member of the regulator Nersa Nhlanhla Gumede.
cost
Meanwhile, Eskom said it was still awaiting reasons for Nersa’s “capital-related costs”.
These costs, the utility said, “significantly” contributed to allowing Eskom to recover costs “related to debt commitments”.
“We hope that Nersa will take the direction given by the court in the previous court on the related matter and this will be handled properly.”
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Last month, Eskom announced that it could reduce its debt and loan accounts from R401.8 billion in 2021, to R396.3 billion – of which municipal debt made up R45 billion – in the latest financial year.
It also suffered a net loss of R12.3 billion after tax despite the power utility’s operating profit increasing by 238% to R20.4 billion.
Electric utilities’ are expected to experience net losses of more than R20 billion by 2023, according to Outgoing Eskom CEO André de Ruyter.