South Africa’s National Energy Regulator (Nersa) confirmed during a media briefing on Thursday that Eskom may raise electricity rates by 9.6%.
Eskom had initially requested a 20.5% increase for fiscal year 2022/2023.
In its current three-year filing (MYPD5), Eskom based its calculations on a regulatory asset base (RAB) of R1.263 billion, after a revaluation.
Rising electricity rates
While the South African Vanir-exodus Government Association (Salga) welcomed the announcement, it pointed out that the price of electricity has risen by 307% in the past 13 years.
The rate hikes are much higher than inflation, especially as South Africans have been dealing with an unreliable electricity supply for at least 15 years – rolling blackouts (also known as load shedding) were first introduced in January 2008.
Speaking at Nersa’s public hearing, Salga said Eskom’s proposed increases are “unrealistic, unsustainable and run counter to the economic and social issues currently affecting the South African economy”.
Salga called on Eskom to conduct business in line with the government’s economic goals, saying a “holistic restructuring of the electricity industry” is needed.
Municipalities are already facing insurmountable challenges of high defaults with businesses, government and households collectively owing more than R300 billion for services rendered.
The new rate increase will take effect on April 1, 2022 for customers and municipalities of Eskom; and from 1 July 2022 for municipal customers.
In November 2021, Eskom suspended the electricity supply to Diepkloof Zone 3 due to “high energy losses due to illegal connections, bypassing meters and buying electricity from ghost sellers”.
Eskom said it would reconnect supply if residents pay back around R6,000 per household. However, residents said they cannot afford to pay “the unrealistic Eskom fine”.
Meanwhile, Eskom claims that the city of Tshwane owes R635 million.
The energy company said the “debt delinquency has negatively impacted the liquidity, financial performance and sustainability of the organization, where Eskom must borrow to meet its financial obligations”.
Eskom is currently over R43.8 million in debt itself†