By BAKANG MOKOTO
12 September 2024 – The Portfolio Committee on Electricity and Energy said they have met with the National Energy Regulator of South Africa (NERSA) to discuss the rationale behind the approved electricity tariff increases for the 2024/25 financial year.
During the presentation, NERSA outlined the Multi-Year Price Determination (MYPD) methodology, emphasising its role in ensuring Eskom’s sustainability while balancing the economic realities facing consumers.
The Chairperson of Portfolio Committee on Electricity and Energy, Nonkosi Mvano said the regulator explained that the decision was based on a thorough assessment of Eskom’s operational costs, revenue requirements, and the need for cost-reflective tariffs to maintain a reliable electricity supply.
“Committee members raised several pressing questions about the tariff increases. One member inquired about the criteria used by NERSA to determine the allowable revenue for Eskom.
“In response, NERSA explained that the evaluation process includes a comprehensive review of Eskom’s financial statements, operational efficiency and the impact of external factors such as inflation and economic growth,” she said.
Mvano further said concerns about the affordability of electricity for low-income households were also voiced, with members questioning how the increases would affect those already struggling with energy poverty. She added that NERSA acknowledged these concerns and highlighted ongoing government initiatives aimed at providing relief, including the Free Basic Electricity policy and targeted subsidies for vulnerable consumers.
“However, members expressed scepticism about the effectiveness of these initiatives, citing reports of inadequate implementation and outreach to eligible households. “Some committee members also had questions about the integration of renewable energy sources and how this transition could influence future tariff structures,” said Mvano.
She said members of the committee expressed interest in understanding how NERSA plans to support the growth of renewable energy, while managing the tariff increases. Mvano said NERSA outlined its commitment to facilitating the transition to a more sustainable energy mix, acknowledging that while renewable energy can contribute to long-term cost savings, the initial investments and the current reliance on traditional energy sources must be carefully managed to avoid an undue burden on consumers. “Committee members also had concerns about the transparency of NERSA’s decision-making process and the perceived disconnect between the regulator’s assessments and the lived experiences of consumers. “The committee questioned the adequacy of stakeholder engagements and queried whether NERSA adequately considered the public’s input in its final decisions,” she said.
Mvano said NERSA affirmed its commitment to public engagement, noting that it regularly conducts public hearings and invites stakeholder input before finalising tariff adjustments. She said, however, members called for more robust mechanisms to ensure that consumer voices are genuinely reflected in regulatory decisions.
Meanwhile, the Minister of Electricity and Energy, Dr Kgosientso Ramokgopa, emphasised the government’s commitment to ensuring energy security while considering all the socio-economic challenges South Africans endure.
Ramokgopa said it is imperative to engage with stakeholders to develop sustainable energy solutions and expressed the hope that the discussions would lead to more effective strategies for addressing energy poverty.
“The committee noted with concern the long-term implications of continuous tariff increases, particularly their impact on small businesses and economic growth.
“Committee members highlighted the risk that rising electricity costs could stifle entrepreneurship and deter foreign investment, ultimately hindering job creation,” he said.
The Guardian 