Eskom Seeks Approval For 16% Per Year Tariff Increase For Electricity

Eskom

VENTURES AFRICA- Eskom has applied to the Regulator for approval to increase electricity tariffs by 16 per cent annually over the next five years, the South African power facility announced on Monday.

Eskom submitted an application to the National Energy Regulator on Friday, the power provider revealed.

The application asks that electricity prices in South Africa be raised by 16 percent each year over the next five years. The increase is split into two categories: 13 percent of the increase is to meet Eskom’s own needs, while 3 percent of the increase is to provide support to independent power providers entering the market.

Current 2012-13 tariffs see electricity priced at 61 cents/kWh ($0.070); which under the proposed plan would increase to 84 cents/kWh ($0.096) by 2017-18 to cover Eskom’s needs alone, or 96 cents/kWh ($0.110) when factoring in the 3 percent increase for new providers.

The current pricing system is subsequent to a tariff approved by Nersa for a three-year basis and expires on March 31st, 2013. As such, the proposed tariffs would apply from April 1st, 2013.

The energy facility claims that increases are necessary to cover the heightened price of resources and production, for which the current tariffs are untenable. Chief Executive of Eskom Brian Dames said in a press statement: “We seek to ensure that Eskom can cover the costs of supplying the electricity needed to power South Africa and invest in the future”.

The raised tariffs will also go towards building new -and upgrading existing – infrastructures across the country in order to support the economy through better power supplies. The provider estimates that investments into infrastructure over the five year period will total 337 billion Rand ($39 billion), and create more than 35,000 jobs.

Dames explained: “We are planning for a growing and successful economy…For that we need to continue to invest in the electricity infrastructure which can support higher rates of economic growth and development and extend access to electricity to all South Africans.”

However Eskom does recognise the pressures this will place on the low-income sections of South African society, with Dames adding that the proposed tariff increase plan: “would ensure that poor households who use very little electricity experience only single digit price increases over the five years.”

Eskom is estimated to provide 95 percent of South Africa’s power supplies.