Calls to cap Eskom tariff increases

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The national energy regulator has been accused of not following its mandate to protect consumers by allowing above inflation electricity price hikes.

“Eskom is making us poor,” said independent energy expert Ted Blom. “That is what killed this economy.” Adding that tariff increases need to be capped, Blom said Eskom could not “recklessly” spend money and then be allowed to recoup it from consumers. “Where are you going to get extra money to pay for electricity prices that are above CPI?” against Eskom. This is the first time Nersa and Eskom have taken matters before the courts.

This is on top of the 5.22% tariff increase the power utility had already negotiated for next year and will bring the total hike to about 15%. But circular 71 from the treasury states that Nersa must consider the CPI when determining whether the increase in expenditure will be funded by a hike in the revenue base or by some other means., which states that a regulator must enable an efficient licensee to recover the full cost of its licensed activities, including a reasonable margin of return.

In addition to changing how tariffs are calculated, Gumede believes that the recent judgment, which favoured Eskom, could have been avoided if Nersa was “procedurally fairer”. He said the method where Eskom goes to the public to seek comment, and then a decision is made without further discussions with the licensee needs to be changed.

 

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