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 and receive a 40% discount on our annual rate.

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

Seven years’ radio silence for taxpayer-funded Rhythm FM

Almost R50-million of taxpayers’ money has been invested but the station is yet to broadcast a single show

Q&A Sessions: Zanele Mbuyisa — For the love of people-centred...

She’s worked on one of the biggest class-action cases in South Africa and she’s taken on Uber: Zanele Mbuyisa speaks to Athandiwe Saba about advocating for the underrepresented, getting ‘old’ and transformation in the law fraternity

More top stories

Limpopo teachers put fingers in primary schoolchildren’s underwear, SAHRC hears

The Human Rights Commission in Limpopo is hosting hearings into bullying, corporal punishment and the sexual abuse of learners by teachers in the province

‘We must not allow scavengers to eat the energy sector’

Mineral resources and energy minister Gwede Mantashe said the transition to renewable energy cannot be an overnight accomplishment.

Finding an HIV vaccine: Five lessons from the search for...

The Covid-19 pandemic has shown that vaccine development and testing timelines can be shrunk from decades to months, but not without shortcomings

Pandemic leaves 1.4 billion learners worldwide behind on education

Human Rights Watch warns that learners may take years to recover from the damage caused by school closures

press releases

Loading latest Press Releases…