South Africans will have to dig deeper when paying for electricity over the next five years with the National Energy Regulator of South Africa on Thursday approving an 8% annual increase.

 

Nersa’s decision will be implemented on April 1 and end on March 31, 2018.

 

The increase is half of what Eskom requested. Cecilia Khuzwayo, Nersa chairperson, said electricity would increase from 65.51c/Kwh in 2013-14 to 89.13c/Kwh in 2018.

 

“Eskom’s application was received and considered against the backdrop of the global economic recession.”

 

Khuzwayo said the sustainability of the electricity industry, the security of supply, affordability and accessibility were key considerations in making such decisions.

 

Numsa spokesperson Castro Ngobese welcomed the decision: “It is not far from our demand that there be an inflation-related increase. Nersa clearly considered the views of society on this issue.”

 

Eskom said it was going to study the decision in detail to assess its impact.

 

Eskom said the 8% average annual increase allowed for revenue of R906.6bn over five years.

 

This means the utility is set to be under budget by R1.5bn. This could have a negative effect on its infrastructure development programme. The South African Chamber of Commerce and Industry said Nersa made a decision sensitive to the economic circumstances. The capacity of businesses to absorb costs has diminished, said CEO Neran Rau.

 

“Electricity pricing is also a key indicator of competitiveness and a factor in foreign direct investment. A lower tariff is therefore beneficial to both,” Rau said.

 

Manufacturing Circle executive director Coenrade Bezuidenhout said, though, the high electricity tariffs charged by municipalities remained a concern.

 

Business Unity South Africa’s policy advisor Raymond Parsons welcomed the decision.

 

Cope MP Kennett Sinclair said: “Nersa gave proper consideration to the global economic recession as well as the sluggishness of our economy.”

 

Past increases

 

» Increases of 5.1%, 5.9% and 6.2% from 2006 – 2009

» 18.7% (14.2% approved), 60% (27.5% approved), 34% (31.3% approved)

»Between 2010-11 and 2012-13, Eskom applied for a 35% increase, Nersa granted 24.8%, 25.8% and 25.9%

» Average price will increase from 65.51c/Kwh in 2013 to 89.13c/Kwh in 2018

For more details go to http://www.thenewage.co.za