Eskom says sorry for load shedding
Power utility Eskom says that the 18.65% tariff increase granted by energy regulator Nersa will bring electricity prices closer to the cost of producing electricity in South Africa.
The group noted Nersa’s decision on Thursday (12 January) and apologised for the severe extent of load shedding the country was currently facing.
“The impact on individuals and businesses is understood. The minimising of load shedding is the highest priority for Eskom, and continuous focus at all levels in the organisation is being given,” it said.
Eskom said it appreciates that the decision made by Nersa was a tough one and recognised the pressures it would place on consumers. However, it said that the increase would allow a further migration to a “price level that reflects the efficient cost of producing electricity”.
“This decision will positively contribute from a financial and sustainability point of view,” said Calib Cassim, Eskom’s Chief Financial Officer.
Nersa granted an 18.65% increase for direct customers from 1 April 2023, with a further 12.74% increase coming in 2024. This is a recovery of R319 billion and R352 billion from customers, respectively.
The increases are conditional, however, with Nersa requiring Eskom to improve energy availability to 65% and to reduce its reliance on open-cycle gas turbines to 6% of load.
Eskom said that it is in alignment with these goals, adding that every effort needs to be made to meet them.
“The shortage in capacity due to both Eskom’s performance and the delays in the Independent Power Producers projects needs to be addressed,” the group said.
The 18.65% granted is far removed from Eskom’s application for a 32% hike. This is in line with previous applications where the power utility made big demand and was granted minuscule price hikes.
These previous determinations were challenged by Eskom in court, resulting in Nersa being ordered to review its methodologies.
This time around, Eskom said that it would carefully assess the reasoning behind the determination.
“It is noted that Nersa has reconsidered capital-related costs when compared to the previous decision. This significantly contributes to allowing for Eskom to recover costs related to debt commitments,” it said.
“Eskom awaits the reasons for the decision for the determination made by Nersa that will provide further insights on how the revenue determinations for FY2024 and FY2025 were derived. It is hoped that Nersa has taken the direction given by the courts in previous judgements on related matters and that these have been correctly addressed.”
Load shedding is currently at stage 6 until further notice.
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