Increasing electricity tariffs will have devastating consequences for the country’s indebted consumers, Debt Rescue said on Tuesday.<\/p>\n
“Total consumer debt is now topping R1.44 trillion and the debt to income ratio is hovering around the 75% mark, which means that three-quarters of a family’s income is already pledged to a variety of creditors,” chief executive Neil Roets said in a statement.<\/p>\n
“With the exchange rate now dropping on an almost daily basis, inflation on the increase, and now a double digit increase in the electricity tariff, consumers are in for a very bumpy ride.”<\/p>\n
He said the country’s middle class, which had only recently escaped the debt trap, would be forced back into poverty, and their only option would be to apply for debt counseling.<\/p>\n
The National Energy Regulator of SA (Nersa) announced on Friday that the price of electricity would increase 12.69% next year.<\/p>\n
Nersa approved Eskom’s plans to recoup losses after it had under-recovered money during the multi-year-price-determination two (MYPD2) control period between 2010 and 2013.<\/p>\n
“Nersa announced on Friday that it approved the implementation plan of the Regulatory Clearing Account balance of R7.8 million for Eskom Holdings SOC Limited.<\/p>\n
“The RCA balance will be a once-off recovery from the standard tariff customers as well as other Eskom customer categories and will only be implemented in the 2015\/16 financial year.”<\/p>\n
This meant consumers would pay an extra 4% on top of the 8%\u00a0 hike approved under the MYPD3 control period.<\/p>\n
The RCA is a regulatory mechanism that allows Eskom to adjust for over-or under-recovery of revenue, as initial price determinations are based on projections and assumptions.<\/p>\n
The Congress of SA Trade Unions said workers could not afford the “outrageous” increases in the prices of basic services.<\/p>\n
“The main problem with the decision is that its rules make it legal for Nersa not to always consult the stakeholders when allowing Eskom to recover losses.<\/p>\n
“We call on the department of public enterprises, as the shareholder of Eskom, to investigate if these claimed over-expenditures are not linked to the delays in the completion of some of the units of the Medupi power station due to shoddy workmanship by private sector contractors.”<\/p>\n
Get ready for a 12.7% electricity price hike<\/strong><\/a><\/p>\n