The National Energy Regulator of South Africa’s (Nersa) decision to grant Eskom a 27,5% tariff increase was a ”watershed” moment, the power utility said in Midrand on Thursday.
”It is bold, courageous and it’s very responsible,” said Eskom chief executive Jacob Maroga.
Maroga said the decision gave a clear message about where the energy regulator believed tariffs should go in the future.
In particular the regulator’s acknowledgement, if current assumptions remained, that a 20% to 25% tariff increase per annum could be on the cards in the next three years was welcomed by Maroga.
”It shows where tariffs need to go for current operations and capital expansion to take place.
On not getting the requested 53% increase, Maroga said: ”It’s not about a single number”.
What was more important was to see that the regulator could be proactive about variations in the situation.
”We need a regulatory mechanism that is both robust and flexible that can respond to the changing environment ….[and] times we are at.”
For example, fuel and capital costs that changed in unpredictable and uncontrollable ways needed to be taken into account in electricity tariffs.
The fact that the regulator had opened up a review of tariffs twice in the financial year, showed it was able to consider these kinds of aspects.
Eskom would be spending R343-billion over the next five years and about R1,3-trillion by 2025 in capital expansion programmes, said Maroga.
He said Eskom was receiving the support it needed to secure the massive funding required to successfully execute capital expansions.
The government was providing Eskom with ”significant support”, having recently allocated R60-billion towards the utility’s expansion.
These kind of measures, including the tariff increases, would ensure Eskom would get the healthy credit rating needed to enter the financial market competitively.
Maroga also said load shedding remained a possibility with increased winter consumption.
He said Eskom was doing its part by ensuring its operations were on track for this period.
He said, though, people still needed to reduce demand.
”If we reduce demand enough we can chase this monster called load shedding … otherwise this monster remains at our doors,” he said. – Sapa