Applause for Nersa’s no to 19.9%

Johannesburg - The National Energy Regulator of SA (Nersa) has received widespread applause for rejecting Eskom’s 19.9% tariff hike application and instead approving only 5.23%.

Announcing Nersa’s decision on Friday, to approve revenue of R190.34 billion for Eskom, the regulator’s chairperson, Jacob Modise, said the decision was based on the available information and an analysis of the power utility’s allowable revenue.

Nersa manager for electricity Mbulelo Ncetezo said they opted for a one-year agreement.

Xolani Mbanga, CEO of the Energy Intensive Users Group of Southern Africa, said the organisation welcomed the announcement and was glad Nersa rejected Eskom’s 19.9% application. It was considered far too high.

The group represents major industrial users that together consume up to 40% of the country’s power.

According to Neva Makgetla, senior economist at Trade and Industrial Policy Strategies, the 5.23% hike seemed to be the best Nersa could offer, because Eskom had much work to do.

Makgetla said the growth in demand for electricity had been lower than the growth in South Africa’s GDP. Despite this, Eskom said in its application that there was evidence of growing demand for electricity.

She pointed out that the high price of electricity was not the sole reason for less demand for power from Eskom.

The Chamber of Mines’ chief economist, Henk Langenhoven, said that without the finalisation of the Integrated Resources Plan to ensure an economically viable energy supply for the country, Eskom would continue to be in danger of failing.

“While we welcome Nersa’s decision to limit the increase to an estimated allowable revenue of about R190 billion, rather than the R220 billion requested by Eskom, electricity costs continue to be the fastest-growing component of the mining sector’s cost base, having increased by more than 300% over the past eight years,” he said.

Eskom spokesperson Khulu Phasiwe said the utility would only offer detailed comment after receiving Nersa’s reasons.