Big electricity price hike on the cards for Joburg

Johannesburg’s City Power has warned that Eskom’s planned tariff increase of 20.5% will be passed on directly to municipal payers and residents.

Speaking to radio station 702, City Power’s manager for pricing and tariffs Frank Hinda said that Eskom had applied to the National Energy Regulator of South Africa (Nersa) for a 20.5% increase as part of an annual review.

“We are hoping that not the entire 20.5% is granted to Eskom. As City Power, we did make substantive objections to elements of Eskom’s application and some Eskom has in fact agreed with,” he said.

“In the event it does get granted to Eskom, then Nersa has to work out the increase that will be applicable to municipal customers. Based on our high-level assessments and historic data, a 20.5% increase would mean a 17.5% increase for municipalities.”

He added that the increase would not only be limited to Eskom’s direct costs but that network and service charges and other operating costs would also rise. This would be done in line with the Eskom increase and inflation, he said.

More price hikes incoming

In its presentation to Nersa on 17 January, Eskom said the request for a 20.5% increase was partly being driven by purchases from independent power producers (IPPs) and carbon taxes – two costs that are outside of Eskom’s direct control. These two costs alone make up around 13.8% of the requested increase, it said.

The group has also indicated that it plans to ask for a further 15.07% increase in 2024 and a 10% increase in 2025. However, this will depend on the actual increase that Nersa grants Eskom this year, with the regulator rarely giving the power utility the full increase that is asked for.

On 5 March 2021, Nersa approved a hike of 15.06% for Eskom’s direct customers, which was subsequently implemented on 1 April 2021. A hike of 17.80% for municipalities was implemented on 1 July 2021.

Over and above the requested tariff increase, Eskom said it is still dependent on further equity support provided by the government to remain a going concern.

It added that every effort is being made to find further efficiencies within the business, to address corruption and fraud, and to make inroads into addressing municipal and other debt.

Read: Eskom gives load shedding update as it prepares for more power cuts

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Big electricity price hike on the cards for Joburg