The National Electricity Regulator (NER) has rejected speculation that future electricity increases will be above inflation rate.
The NER confirmed in its latest monthly bulletin that no agreement in this regard had been concluded with Eskom, the government news agency BuaNews reported Thursday.
The national electricity regulator was reacting to reports claiming that Eskom intended to apply for a special mid-year price increase to fund the planned refurbishment of a number of its power stations.
NER disputed this, saying was incorrect and misleading the public.
‘As the regulatory authority charged with approving Eskom’s tariff increases, it is important that we clear up any confusion that might have been caused by these inaccurate reports,’ said NER Chief Executive Officer Dr Xolani Mkhwanazi, in a message to all stakeholders.
His statement alleviated fears expressed by rural communities, corporates and cash strapped municipalities that another hike in electricity rate would be unaffordable. Mkhwanazi explained that Eskom could only apply for one price increase per year. This year’s increase had already been implemented on 1 January, and there had been no further application.
He pointed out that the funding of Eskom’s capital expenditure programme,
factored into its most annual price increases, was sufficient to cover the upgrading
of power stations and other projects.
Mkhwanazi explained that it usually took the NER about five months to evaluate
the annual Eskom application. The next one was due to be submitted at the beginning of July. If any increases were approved, they would only become effective on 1 January 2004.
NER maintains that when submitting its annual application, Eskom would not be
aware of the inflation rate for the following year.
Responding to questions from stakeholders, regarding existing power stations, the
NER confirmed that in the past Eskom had overestimated the electricity demand, and built more power stations than necessary.
This had resulted in excess generation capacity.
This factor, together with improvements in efficiency, had made it possible to reduce prices in real terms. South Africa currently had one of the lowest electricity
price rates in the world, and the NER would ensure that this situation was maintained. – I-Net Bridge