Only just a few hours earlier than the court-ordered deadline, vitality regulator Nersa on Thursday made the “very difficult” choice to grant Eskom a tariff improve of 18.65% for 2023/24 and 12.74% the next yr.
This, nevertheless, comes with non-negotiable circumstances that can turn into a part of Eskom’s licence circumstances. Whether the regulator will be capable of implement the circumstances stays to be seen.
Read: Price of energy from Eskom to go up almost 19%
Those who purchase electrical energy straight from Eskom can pay extra from 1 April subsequent yr and people who get their electrical energy from municipal distributors from 1 July.
The improve comes in opposition to the backdrop of Stage 6 load shedding “until further notice”, leaving South Africans in the dead of night for as much as 10 hours a day.
It is an additional setback for customers who’re battling with tight budgets, excessive gas costs, will increase in rates of interest and inflation. Businesses are struggling lack of manufacturing and big extra bills as a result of load shedding, and indications are that many small companies could also be compelled to shut.
Read: Stage 6 load shedding prolonged all through the day
‘Intolerable’
Jannie Strydom, CEO of Agri Western Cape, mentioned in a press release though the rise is decrease than the 32% requested by Eskom, 18.65% is insupportable.
“This is a drastic increase in tariffs for electricity supply that is already extremely unreliable. Consumers therefore pay more for less power.”
Source: Nersa
“The energy needs of farming operations remain the same irrespective of the electricity tariff. Producers are now forced to invest in alternative sources of electricity, which requires enormous capital,” says Strydom.
“Food security cannot rest solely on the shoulders of producers. Food production is currently under immense pressure. Decision-makers need to recognise the seriousness of the problem – urgent intervention is needed.”
Unfair and unjust
Cape Town Mayor Geordin Hill-Lewis mentioned: “South Africans are being asked to pay for corruption and mismanagement at Eskom in the most unfair, unaffordable and unjust way.”
He added: “Eskom has alternative ways to raise funds: by reducing their bloated payroll, by cutting suppliers who are over-charging especially for sub-standard coal, and by ending corruption, including recovering state capture loot.”
Nersa chair Thembani Bukula mentioned it was a tough choice and Nersa thought of the nation’s financial challenges and the impact of the will increase on the economic system within the quick, medium and long run.
It needed to stability the duty to make sure Eskom’s sustainability with the affect on the economic system and the affordability of electrical energy.
The regulator acquired greater than 2 000 written submissions about Eskom’s tariff utility.
One of the regulator members, Thembeka Semane, opposed the choice and had her dissenting vote be aware “for anything above inflation”.
Adverse court docket rulings
After various adversarial court docket rulings when Eskom took a number of of the regulator’s tariff determinations on evaluation, it tried to stick strictly to the prescribed methodology and the officers initially appeared inclined to largely give Eskom what it was asking for.
One of essentially the most debated points was the allowance for diesel to gas the utility’s open-cycle fuel generators (OCGTs). Eskom requested for a load issue of 12%, which is way more than the 1% Nersa allowed when the plant was nonetheless used as supposed, in periods of peak demand and emergencies. (Load issue is the ratio between the precise time the plant is in use in comparison with the utmost time it’s obtainable to be used.)
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The officers suggested in December that Eskom’s request be granted, and after regulator members had them rework the numbers, lowered it to 10% – which was the advice earlier than the regulator on Thursday.
During the assembly the regulator members nevertheless determined to cut back it additional to six%, which can give Eskom R8.4 billion at a worth of R6.34c/litre.
Nhlanhla Gumede, full-time regulator member for electrical energy, mentioned throughout a media briefing on the day that it might be unfair to anticipate customers to pay for Eskom energy stations which can be standing idle after which pay for diesel as effectively.
He mentioned Eskom should improve the supply of its energy stations to cut back its reliance on diesel. He mentioned Eskom has about 39 000MW of put in coal capability however solely 16 000 to 18 000MW is usually obtainable to generate electrical energy. “They are using OCGTs instead of coal.”
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Gumede mentioned the OCGT load issue is presently above 16%.
The circumstances
Nersa due to this fact put some “non-negotiable” circumstances to the tariff improve, particularly:
- OCGTs could solely be used as supposed, for peak-time technology and emergencies;
- Funds allotted for upkeep could solely be used for upkeep; and
- The share of technology capability unavailable as a result of breakdowns should be lowered to twenty% in 2023/24 and 18% within the following yr.
So far this yr breakdowns are at 33%. They have been above 20% for not less than the final three years.
Gumede mentioned the circumstances will turn into a part of Eskom’s licence circumstances however wouldn’t broaden on what would occur if it doesn’t adhere to them.
A licensee could also be sanctioned and even lose its licence if it doesn’t keep on with its licence circumstances, however Gumede acknowledged that many municipalities don’t adjust to licence circumstances in any respect. Nersa has been very gradual to behave in opposition to them, which leaves doubt about its skill to behave in opposition to Eskom, ought to it fail to stay to the circumstances.