Eskom to hike tariffs by 12.69%

By Staff Writer
By Ashleigh Brown, journalist, Justmoney 
 
Eskom has been given the green light to hike electricity tariffs by 12.69% by the National Energy Regulator of South Africa (Nersa) for 2015, which will only add to the already struggling economy and consumer woes.
 
As inflation is set to average at 6.2% next year, said the South African Reserve Bank (Sarb) last month, hiking electricity prices is more unwelcome news for consumers and business alike. 
 “The implementation of the second Multi-Year Price Determination (MYPD2) Regulatory Clearing Account (RCA) in 2015/16 will result in an average tariff increase of 12.69% for standard customer tariffs from the 8% approved in the MYPD3 decision of February 2013,” said Nersa in a statement. 
 
According to Eskom, determining the price of electricity is based on future ''projections'' and ''assumptions'' of electricity usage.
 
Nersa has also granted Eskom a balance of R7, 818m: “The RCA balance will be a once-off recovery from the standard tariff customers as well as other Eskom customer categories and will only be implemented in the 2015/16 financial year,” said the regulator.
 
The RCA balance is a contributing factor to the extra 4% increase customers are set to pay by next year. 
 
Assistance programmes 
 
“Eskom is acutely aware of the impact of tariff increases on the economy, particularly poor households,” said Eskom in a presentation. Therefore, Eskom has assistance programmes for these households. 
 
There are three main programmes at the moment: the electrification programme, which subsidies the cost of electricity in poor homes, mainly in rural areas; the free basic electricity programme, which gives 50 kilowatt hours to the poorest households, and the free energy efficient solar water rebates programme. 
 
However, the programmes are not reaching as many people as was initially anticipated: “Between 1994 and 2013/14, just under 5.7 million households had been electrified under the programme, while in the period from 2002 to 2013/14, 68 115 households in the Eastern Cape, KwaZulu-Natal and Limpopo had been supplied with non-grid technology (solar panels and renewable energy),” said the Parliamentary Monitoring Group in a statement.  
 
However, there were still 3.3 million households without electricity, with 75% of these in the Eskom supply area, and 25% in municipal supply areas. 
 
Energy struggles 
 
The price hike comes as Eskom seeks revenue amounting to R1, 09 trillion for the five year period ending 2017/2018 and struggles to pay for the debt it has resulting from the building of new power plants. 
 
However, debt is not the only concern Eskom has. The power company is also struggling to generate enough electricity as the demand is outstripping the supply. 
This also comes about as Russian state nuclear vendor, Rosatom, will supply the South African government with eight new nuclear units to the capacity of 9600MW. However, this will reportedly only be ready by 2030. 
 
“We have serious concerns about this agreement. Last year, an unsigned draft agreement sought to give Russia exclusive rights for the construction of nuclear plants in South Africa by committing government to securing consent from Russia should South Africa wish to enter into any other agreements with third-country organisations or countries,” said Lance Greyling, Democratic Alliance shadow minister of energy. 
 
Government announced last month that Eskom would receive a financial rescue package, the details of which will be announced by Financial Minster Nene in his speech on October 22.  
 
Justmoney reported on the 8% increase earlier this year, click here. 
 
To find out ways that you can save on your electricity costs, click here. 

Recent Articles

Featured Request your credit report from the right bureau

With so many different credit bureaus in South Africa, it may be difficult to decide from which one to request your credit report. We have a look at what you should be aware of when selecting a credit bureau.

Applying for a home loan? Consider the repo rate

When you apply for a home loan, one of your top priorities should be to secure a low interest rate. In order to achieve this, you need to be familiar with the repo rate. We find out more about this.

Effective financial planning as a single parent

As a single mom or dad, it can be challenging to keep up with the ever-increasing expenses of raising a child. We have a look at the importance of setting up a budget as a single parent.

How your credit score impacts your insurance – and vice versa

Since insurance is paid in advance, it may seem unrelated to your credit score. However, these two are in fact linked to one another. We find out why insurers look at your credit score.

Deals

Get a FREE flight ticket with Hotel Sky

Price: From R5,200
When: Until 31 January 2022
Where: Johannesburg and Cape Town

Voucher for 2 special at Bakwena Day Spa

Price: From R1,798
When: Until 31 January 2022
Where: Centurion, Hartbeespoort and Stellenbosch

Spier Hotel Summer Special

Price: Available on request
When: Until 31 March 2022
Where: Stellenbosch


Latest Guide

Guide to debt rehabilitation solutions