Eskom will increase electricity tariffs by 15.63% on 1 April 2021, following an agreement reached with the National Energy Regulator of South Africa (Nersa) for the 2021/2022 financial year.
The settlement was confirmed in a court order handed down by Justice Joseph Raulinga on 15 February.
Raulinga had in January 2021 heard Eskom’s application to have an earlier High Court order allowing the increases executed, pending Nersa’s appeal of the matter in the Supreme Court of Appeal.
The High Court in 2020 found that the power utility should recover R69-billion in a phased manner over a three-year period.
Nersa had reportedly negotiated with Eskom and reached a settlement of R10-billion to mitigate the risk of the court ordering a R23-billion addition, the amount the High Court had originally found Eskom was entitled to for the next financial year.
This would have resulted in an increase of 21%.
The new court order stated that “an amount of 5.44c/kWh will be added to the average standard tariff for Eskom customers in the 2021/22 tariff year making the aggregate standard tariff for Eskom customers in the 2021/22 tariff year 134.30c/kWh”.
Phased tariff increases
News of the increase comes a day after Eskom CEO André de Ruyter said the utility was working with Nersa to ensure its planned tariff increases don’t come as shock to customers.
These comments came during a recent episode of FMF’s The Free Marketeers web series, during which De Ruyter elaborated more on Eskom’s plans to reduce load-shedding, increase its operational reliability, and improve finances.
He maintained cost-reflective tariffs were required to address Eskom’s revenue shortfall, as the quantum of electricity Eskom sold had for a fairly long time remained flat, which Eskom attributed to a lack of growth in the economy.
According to benchmarking that the utility had done internationally “on a number of fronts”, it was absolutely convinced that Eskom’s electricity price was below the norm.
De Ruyter said Eskom was making good progress in negotiations with Nersa for price increases.
“We will be able, I believe, to address the electricity tariff increase issue in a way that does not cause a price shock to the economy,” De Ruyter said.
“We are at idem [in agreement] with Nersa that what we want to avoid is a sudden large increase in the cost of electricity that causes distress to households and businesses.
“What we are going to try and do within the confines of the regulatory system is to have a phased approach to this,” he added.
De Ruyter emphasised that the amounts on the bill that a business or homeowner would get differed from Eskom’s actual electricity selling price. These bills would include the additional charges that municipalities or other distribution authorities charged.
He submitted that those charges would in instances vary from justifiable, to very high, and above the norm.