Eskom seeks price increase of 25.3 percent

Eskom has submitted an application to the National Energy Regulator (NERSA) to reopen the Third Multi-Year Price Determination (MYPD3) decision for the 2015/16 to 2017/18 period on Thursday 30 April 2015.
 
The application has been submitted with the aim of achieving a 25.3% total price increase for 2015/16. The price increase has been sought as Eskom “requires cost recovery of R32, 9bn for Open-Cycle Gas Turbines (OCGTs) and R19, 9bn for the Short-Term Power Purchase Programme (STPPP),” according to NERSA.
 
The price increase of 25.3% will include the 12.69% that NERSA has already approved, in addition to a 10.10% increase for OCGTs and 2.51% (2 cents per kilowatt hour) increase for the environmental levy, which Eskom is asking for in the application.
 
NERSA told Justmoney that if the increase is approved, it will determine when the increase would be implemented.
 
The submission of the application follows Eskom’s consultation with the South African Local Government Association (SALGA) and National Treasury.
 
NERSA noted: “The Energy Regulator is considering the application taking into consideration the urgent need to stabilise the electricity network to avoid a possible total blackout and Eskom’s operational and financial challenges.”
 
DA responds to Eskom’s NERSA application*
 
The Democratic Alliance (DA) has responded to Eskom’s application to NERSA for a 25.3% price increase for 2015/16 by calling for “a parliamentary briefing by NERSA on the pending decision to grant Eskom yet another massive electricity price hike.”
 
Gordon Mackay, DA shadow minister of energy, has sent a letter to Richard Majola, the chairperson of the Portfolio Committee on Energy, requesting that NERSA be compelled “to appear before the Committee to rationalise what criteria and methodology it will use to decide on whether or not to grant Eskom a new tariff hike.”
 
This request comes after NERSA announced that it would announce its decision regarding Eskom’s price increase application by the end of the week.
 
Mackay noted: “It must be remembered that NERSA is bound by its mandate to only allow the revenue an efficient operator needs. As the Eskom crisis deepened in recent months, government has repeatedly stated its support for higher tariffs. NERSA now has its job cut out to maintain its independence and balance the needs of Eskom, its shareholder and consumers.”
 
Eskom was contacted for comment, and responded with the NERSA press release.
 
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*Updated on 12 May 2015