Engineering News, 20 September, 2017.
State-owned electricity utility Eskom has sounded a warning that, even if its allowable revenue is not increased at all for the 2018/19 year, tariffs will still need to rise by 9.4% simply to accommodate a “rebasing” of electricity sales volumes when compared with those approved in the third multiyear price determination period (MYPD3).
The utility has made a single-year application to the National Energy Regulator of South Africa (Nersa) for allowable revenue of R219.5-billion, which would translate to a hike of 19.9% from April 1 for direct customers and 27.5% for municipalities from July 1.
The submission, which is available on Nersa’s website, includes a request for R13.2-billion in higher operating expenses, R11.2-billion in additional independent powerproducer (IPP) costs, a R1-billion increase in primary-energycosts and R2.8-billion for international purchases. Even after “sacrificing” R12-billion in its return-on-assets request, based on a decision to “phase-in” its weighted average cost of capital over time, and factoring a R1.8-billion reduction in the environmental levy, owing to a fall in the amount of energysent out, its submission still translates to what would be a significantly above-inflation hike from April 1.
(Ed. note: And down the slippery slope we go – the higher the electricity tariffs, the less electricity we use, the higher the electricity tariffs – until everyone who can gets off the grid and Eskom and the municipalities are left with customers who can’t pay! Time for a new business model for our electricity utilities.)