A massive tariff hike could be on the cards for electricity consumers before the end of 2018.
This comes as part of a plan Eskom hopes to employ to recover tens of billions of rands lost to overspending on coal, and lower than expected sales between 2014 and 2017.
A report submitted to the National Energy Regulator of South Africa (NERSA), shows Eskom wants to recover as much as R66-billion. This is the amount lost in “the Gupta years”.
Eskom presented their projected sales and costs to NERSA earlier this year, as part of their applications. Eskom may also present the actual figures. If NERSA believes the costs were within Eskom’s control, the power utility has to pay for it. If not, tariff hikes of up to 30% will be imposed to recover the money.
In January, the regulator published Regulatory Clearing Account (RCA) applications by Eskom to further increase tariffs. NERSA gave the public until March 23 to submit comments on the application.
The RCA is a monitoring and tracking mechanism that compares “uncontrollable” costs and revenues assumed in the multiyear price determination (MYPD) made by NERSA, to actual revenue and costs incurred by Eskom.
Former senior Eskom executive Ted Blom from Mining and Energy Advisors believes that if NERSA grants Eskom’s wishes, public funding will be used to power the utility’s “gravy train”.
Blom also believes that the backlog Eskom is trying to recover is due to corruption and mismanagement.
Energy analyst Chris Yelland says the past is indicative of the decision NERSA will make. Eskom requested a tariff hike in 2018/19 of 19.9%. However, NERSA only granted a 5.2% hike last December.
According to Yelland, the power utility will be ‘lucky’ if they are granted half of the 30% tariff hike.
He said many customers are going off Eskom’s grid by making use of solar panels to avoid the excessive cost of centralised electricity.
A definite answer on tariff increases will be made on August 29, 2018.
Picture: Pixabay