Electricity parastatal Eskom has failed to secure permission to hike annual tariffs by 18% after the National Energy Regulator (Nersa) on Thursday ruled that it may only implement a price increase of 14,2%.
Nersa said that the rule changes applied for by Eskom in April had been declined.
Eskom had requested that it be allowed to increase tariffs by 18,7% during the 2008/09 financial year to maintain effective operations following a steep increase in its input costs of coal and the need to finance capital expenditure.
Recognising Eskom’s need for a healthy balance sheet in light of its capital financing needs, Nersa did agree to an adjustment of R1,27-billion to cater for the additional return and depreciation resulting from the increased regulatory asset base in 2008/09 and an adjustment of R2,4-billion to cater for the increased primary energy cost expected for 2008/09.
It said these adjustments would result in tariff revenue of R45,45-billion and a total revenue, including special pricing agreement sales, of R47,97-billion.
”Based on tariff sales of 201 503 GWh [gigawatt-hour], the average tariff would be 22,61 cents per kWh [kilowatt-hour], which is a 14,2% increase on the expected average tariff per kWh for 2007/08,” Nersa said.
The regulator said that it had attempted to strike a balance between the impact of price increases on the economy and the parastatal’s steep capital requirements.
While the cost of the new power plants were R150-billion at the time of its application, Eskom has approved plans to spend R204-billion and this sum is expected to rise to about R1,3-trillion as new projects get the go ahead.
The spending is necessary if Eskom is to double its output capacity to 80 000 megawatts by 2025. – I-Net Bridge