Get more Mail & Guardian
Subscribe or Login

Nersa’s Eskom approval could see overall tariff increase of up to 13%

Electricity prices are likely to climb after the National Energy Regulator of South Africa (Nersa) announced that Eskom can recoup costs of R7.8-billion incurred during its previous cycle of tariff increases.

Nersa announced this week that it had approved Eskom’s application to recoup under-recovered costs incurred during the last multi-year price determination period, which ended last year.

The decision could see an increase of between two percentage points and five percentage points, which will be tacked on to Eskom’s most recent round of tariff increases of 8% granted over the next five years.

Analysts expect the increase to put further pressure on South Africa’s inflation outlook, at a time when consumer inflation has risen above the South African Reserve Bank’s targeted range of 3% to 6%.

Eskom welcomed the decision – although the amount allowed by the regulator was substantially below the R18.4-billion that Eskom had applied for through the regulatory clearing account.

Tariff adjustment
Charles Hlebela, spokesperson for the regulator, said the public could expect a tariff adjustment, which would begin from April 2015.

The regulator had yet to develop an implementation plan for the adjustment, which would outline how the money would be recovered in the coming years, Hlebela said.

Nomura analyst Peter Attard Montalto, in a research note, said tariffs would increase by between two percentage points and five percentage points, potentially increasing tariffs to 13% overall.

Larger tariff increases played into “existing Reserve Bank hawkishness”, he said. The central bank has warned that it is in an upward cycle of interest rate hikes – most recently increasing the repo rate by 25 basis points to 5.75%.

Inflation figures released by Statistics South Africa last week showed that consumer price inflation in June sat at 6.6%.

This comes alongside declining forecasts of economic growth.

The International Monetary Fund last week cut South Africa’s 2014 growth forecast to 1.7%, down from 2.3% in April, owing to electricity constraints and labour conflict.

Subscribe to the M&G

Thanks for enjoying the Mail & Guardian, we’re proud of our 36 year history, throughout which we have delivered to readers the most important, unbiased stories in South Africa. Good journalism costs, though, and right from our very first edition we’ve relied on reader subscriptions to protect our independence.

Digital subscribers get access to all of our award-winning journalism, including premium features, as well as exclusive events, newsletters, webinars and the cryptic crossword. Click here to find out how to join them.

Lynley Donnelly
Lynley Donnelly
Lynley is a senior business reporter at the Mail & Guardian. But she has covered everything from social justice to general news to parliament - with the occasional segue into fashion and arts. She keeps coming to work because she loves stories, especially the kind that help people make sense of their world.

Related stories


Subscribers only

‘People feel they have a stake in SAA’ — Gidon...

Interest in the beleaguered national carrier, which has received billions of rands in public funding, means criticism is inevitable

Soweto teacher dismissed for the alleged repeated rape of a...

The learner was 13 when the alleged rapes started, and they continued for two years until she asked to be moved to another school

More top stories

ANC committed to paying staff salaries, but employees are not...

ANC staffers picketed outside Luthuli House on Tuesday after months of problems with salary payments

Kanalelo Boloetsi: Taking on Lesotho’s cellphone giants, and winning

A man who took on cellphone data regulators over out-of-bundle rates is featured in this edition of a series on human rights defenders in the SADC region

Iqbal Sharma’s brother-in-law granted bail in Free State farming case

Dinesh Patel appeared on the same charges that have seen Sharma denied bail and the prosecuting authority seek the extradition of the Gupta brothers

Two-million new J&J jabs to come within two weeks, says...

Johnson & Johnson plans to replace our two-million unusable vaccines by July. The vaccines are unsuitable for use and must be destroyed, while the country’s vaccination programme is behind schedule

press releases

Loading latest Press Releases…