Power utility Eskom has applied for a 15% increase to tariffs every year for the next three years – but says that it is actually entitled to hike fees by 90%.
This is according to energy analyst Ted Blom, who says that the group based the figure on an overestimation of sales amounting to R118 billion since 2013, which it is now trying to recover.
According to Blom, Nersa announced Eskom’s double application for tariff increases on Friday (19 October).
“The first application relates to a backdated claim for a shortfall of R21.6 billion for the 2017/2018 years, Eskom declaring below budget electricity sales revenue as the major component of this claim.
“An initial target included in Eskom’s MYPD3 application of 2013, shows a sales overestimate of a whopping R118 billion – an amount they are now seeking to recover through increased tariffs,” Blom said.
The second claim relates to Eskom’s three-year budget wherein they claim they are actually entitled to a 90% tariff increase according to the Multi-Year Price Determination.
Blom said that Eskom toned down its claim “in an apparent bid to ‘accommodate South Africa'” by curbing this application to three increases of only 15% per annum.
The analyst questioned the methodology used by Eskom to calculate how much money it was owed (and thus directed its tariff hike applications), as well as lack of transparency into Eskom RAB (Regulated Asset Base) which in the current application is the key driver of the escalation in Eskom tariffs.
Should energy regulator Nersa approve the 15% tariff hikes, South Africans would see prices jump by almost 20% in April 2019.
According to Blom, South Africans should not be paying for the bloat and corruption at Eskom – adding that prices could drop by 50% if the utility was run correctly.