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Questions over Eskom pricing

Jan 15 2013 13:55 Sapa

Eskom chief executive Brian Dames. Picture: Theana Greugem

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Cape Town – The City of Cape Town is concerned about a lack of clarity in Eskom's multi-year price determination 2013/14, otherwise known as MYPD3, application.

The City's director of electricity services, Dr Leslie Rencontre, told the National Electricity Regulator of SA (Nersa) on Tuesday there was no clarity on Eskom's future build programme post-MYPD3, no details on a coal pricing pact, nor on the power utility's future mandate.

There was also a lack of certainty regarding the impact on customers after 2013/14.

The energy regulator is currently holding public hearings on Eskom's proposed MYPD3.

Eskom has asked for a 16% increase in electricity prices each year for the next five years.

This would take the price of electricity from 61 cents a kilowatt hour in 2012/13 to 128c/kWh in 2017/18 - more than doubling the price over five years.

The current multi-year price determination, MYPD2, ends on March 31 2013.

In contrast to the MYPD1 and MYPD2, which both spanned three years, Eskom is now proposing a five-year determination for MYPD3 to ensure a predictable, longer-term price structure.

Rencontre said the impact of MYPD3 on the economy had to be considered, particularly regarding small manufacturers, as well as the secondary effect it would have on inflation.

It was also necessary to recognise the impact of the 78% tariff increase between 2008 and 2011 on consumers and the economy.

On the positive side, Rencontre said, Eskom was striving to achieve savings of R30bn in operating expenses over five years without maintenance being compromised.

Also positive was Eskom's endeavours to improve the entity's credit rating, and no dividend payment to shareholders for the foreseeable future.

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nersa  |  electricity tariffs  |  eskom
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