Court order will raise electricity prices by another 15%

The National Energy Regulator of SA (Nersa) has entered into a consent order to add R10bn to electricity tariffs in the coming financial year, which will push power prices more than 15% higher.

On Tuesday, the Pretoria high court ordered Nersa to add R10bn to Eskom’s allowable revenue to be recovered from tariff customers in the 2021/2022 financial year, BusinessLIVE reported.

This comes on top of another R6bn in increases approved by the regulator for implementation in the coming financial year, which starts in April. In a statement, Nersa said this will result in an average tariff percentage increase of 15.63% in 2021/2022.

The news of further increases comes as the utility continues to push for cost-reflective tariffs. Businesses, however, argue that many enterprises cannot survive higher power prices.

The consent order follows Eskom’s application that it be permitted to recover R23bn in the 2021/2022 financial year as per a court judgment handed down in July 2020. In that order, the court found that Nersa should not have included a R69bn government bailout into its calculations when determining tariff increases for the utility.

Nersa is now required to add the R69bn, broken up into three amounts of R23bn, to electricity tariffs over the coming three financial years.

The regulator was granted leave to appeal the judgment, which effectively suspended the implementation order but prompted cash-strapped Eskom to approach the court for the first tranche of tariff increases to be implemented.

In a statement, Nersa said Tuesday’s consent court order follows discussions and an agreement between itself and Eskom.

Instead of R23bn, R10bn was agreed as Nersa has already taken decisions on other Eskom applications that will result in tariff increases in the 2021/2022 financial year.

As stipulated in Tuesday’s consent order, an amount of 5.44c/kWh will be added to the average standard tariff for Eskom customers in the 2021/2022 year, making the aggregate average standard tariff for direct customers 134.30c/kWh.

Tuesday’s order does not stop Nersa from proceeding with the appeal that has commenced at the Supreme Court of Appeal against the high court’s judgment of July 2020.

BusinessLIVE