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Electricity tariff to increase by 2.2 % in 2017

By Danielle van Wyk

The National Energy Regulator of South Africa (NERSA), announced last week that Eskom can implement a 2.2% tariff increase for the 2017/18 period. This forms part of a previous multi-year increase determination agreement, which at the time had allowed for a maximum tariff increase of 8%.

Eskom’s allowed revenue was confirmed at R205 214 million for the last year of the MYPD3 period (2017/18 financial year). “The allowed revenue will result in percentage increase of 2.2% due to the base adjustments made in the preceding years as a result of the approved Regulatory Clearing Account (RCA) balances for Eskom (12.7% for 2015/16 and 9.4% for 2016/17),” stated Nersa.

The Energy Regulator confirmed the allowable revenues on the basis of the approved MYPD3 revenues and average price for 2017/18. “The revenue will be able to cover all of Eskom’s allowed costs, plus a return to the value of R33 667 million as per the MYPD3 decision. The allowable revenue also includes an amount of R23 018 million for the Independent Power Producer (IPP) purchases as a cost pass through in line with the MYPD3 methodology. The cost recovery mechanism for IPP purchases will still be implemented. In this regard, any over or under-recovery will be dealt with through the RCA mechanism,” Nersa added.

"It's important to indicate that Nersa did not make any new decisions for Eskom for the 2017/18 period,” said Nersa chair Jacob Modise, told News24. This decision was made in February 2013.

That being said, the Regulator noted that they will be allowing Eskom in future to make a new application for a price increase should there be possible cash flow issues. Currently, however, Eskom is not allowed to apply for a new RCA thanks to a recent High court ruling, which set aside the regulator’s decision to grant Eskom a tariff increase.

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