{"id":636995,"date":"2022-10-23T07:18:35","date_gmt":"2022-10-23T05:18:35","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=636995"},"modified":"2022-10-23T07:18:35","modified_gmt":"2022-10-23T05:18:35","slug":"good-news-for-electricity-prices-in-south-africa-report","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/energy\/636995\/good-news-for-electricity-prices-in-south-africa-report\/","title":{"rendered":"Good news for electricity prices in South Africa: report"},"content":{"rendered":"

South African households that get their power supply from municipalities should stop seeing unfair price hikes in the future after the High Court ruled that energy regulator Nersa’s methodologies for calculating increases were illegal and invalid.<\/p>\n

The court has given Nersa 12 months to correct its methodologies.<\/p>\n

Speaking to the City Press<\/a><\/strong>, the businesses and chambers of commerce that brought the legal action against the regulator said that municipal power users will now be relieved from having to pay for cable theft, illegal connections and failing infrastructure, which is out of their control and the sole responsibility of the municipalities.<\/p>\n

Previously, Nersa provided a limit at which municipalities could hike rates, which were unilaterally approved as long as they stayed within that range. The court found that the methodology doesn’t factor in how much it costs each individual municipality to produce power, and there is no public consultation over the prices.<\/p>\n

The net result of the court ruling is that businesses and households should benefit from a more cost-reflective tariff structure in the future, the business chambers said. Municipalities will no longer be allowed to charge tariffs to fund power losses that are the result of poor maintenance and power and cable theft.<\/p>\n

Hot water<\/strong><\/p>\n

Nersa has landed in hot water over its methodologies in the past, mainly related to Eskom’s tariffs.<\/p>\n

The national power utility applies every year to the regulator for massive price increases, only to be limited to single-digit hikes. Eskom has argued that its tariffs are not reflective of the cost to produce electricity, and Nersa’s limitations are creating a ‘backlog’ of hikes – a bubble that is about to burst.<\/p>\n

Eskom has applied for a 32% tariff hike in 2023, which, when added to court-ordered backlogs, could see prices climb by over 38%.<\/p>\n

This proposed tariff hike has been rejected by major metropolitan municipalities, civil action groups and even Nersa insiders, who say that consumers cannot afford the hike and should not be the ones to suffer for Eskom\u2019s inefficiencies.<\/p>\n

However, according to Intellidex analyst Peter Attard Montalto, the country has simply run out of options regarding electricity pricing.<\/p>\n

He said that cost-reflective tariffs for Eskom are 40% to 45% above current levels, and the power utility is trying to get there as quickly as possible to address its revenue shortfalls, growing debt and operation needs.<\/p>\n

Eskom\u2019s original plan was to smooth this out over several years, but he said this has been stymied by Nersa, which has prevented more significant increases in the past.<\/p>\n

However, court cases over the years have shown that Nersa has acted illegally in blocking Eskom from recovering funds, so now this substantial historic \u2018backlog\u2019 of increases is coming out in one go.<\/p>\n

\u201cFor Eskom, there really is no choice \u2013 either it recoups the costs through tariffs, or it recoups through bailouts,\u201d the analyst said. \u201cYou can have a zero percent increase, but then Eskom needs a bailout of R80 billion. Clearly, that is not viable.\u201d<\/p>\n

\u201cWe\u2019re running out of options here, and unfortunately, despite it being very challenging, we\u2019re going to need a very large tariff increase.\u201d<\/p>\n

Nersa has until the end of the year to decide whether or not to grant the increase Eskom wants.<\/p>\n

\n

Read: Here are some of the biggest renewable projects planned for South Africa \u2013 including Ramaphosa\u2019s latest<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

South African households who get their power supply from municipalities should stop seeing unfair price hikes in the future.<\/p>\n","protected":false},"author":10,"featured_media":481287,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9874],"tags":[26,4080],"class_list":["post-636995","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-energy","tag-headline","tag-intellidex"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/636995","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=636995"}],"version-history":[{"count":3,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/636995\/revisions"}],"predecessor-version":[{"id":637001,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/636995\/revisions\/637001"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/481287"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=636995"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=636995"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=636995"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}