Johannesburg - Wide acclaim has greeted a move by the
National Energy Regulator of SA (Nersa) to limit an electricity tariff hike to 8%
over the next five years.
The decision was welcomed by, among others, the Federation
of Unions of SA (Fedusa), Agri SA, the Democratic Alliance, the Inkatha Freedom
Party, Western Cape Finance MEC Alan Winde, and the Manufacturing Circle.
Eskom, which had applied for a 16% increase each year for
the next five years, said Nersa's decision could present difficulties.
Announcing the decision, Nersa chairperson Cecilia Khuzwayo
said it was "based on facts".
"The third multi-year price determination [MYPD3] will
be 8% over the next five years," she said.
The increase Eskom had sought would have more than doubled
the current price, taking it from 61 cents a kilowatt hour in 2012/13, to 128
cents a kWh in 2017/18.
As a result of Nersa's decision, the price will increase
from 65.51 cents a kWh in 2013/14 to 89.13 cents a kWh in 2018.
This meant the total revenue approved for the five-year
period amounted to R906m.
In reaching that amount, Nersa had conducted a detailed
analysis of Eskom's application, and had followed due process by holding public
discussions on the tariffs.
"Our challenge... has been and still remains regulating
the energy sector in the manner that balances the interests of energy producers
on one hand and consumers on the other hand," she said.
Eskom spokesperson Hillary Joffe said the parastatal would
study the decision.
"We have noted the decision and it will present a
challenge for Eskom," she said, adding that Eskom would try to keep the
country's lights on.
"We will now be looking at how we can meet this
challenge," she said.
Eskom later said in a statement the new tariffs would take
effect on April 1 for Eskom customers and on July 1 for municipal customers.
Can Eskom appeal?
Nersa electricity subcommittee chairperson Thembani Bukula
said the 8% increase was sufficient for Eskom to fulfil its obligations.
"Our function is not to run Eskom into the
He said the decision on tariffs had been made independently
"No, we did not speak to Eskom. We tell them what the
decision is," he said in a response to a question.
Asked whether Eskom could appeal Nersa's decision, Bukula
said legislation allowed for the parastatal to approach the high court, if
TAU SA president Louis Meintjes said the tariffs represented
an increase in farmers' monthly accounts.
"If government is not going to consider ways and means
to support the producers, the South African population is indeed facing a bleak
future," he said.
Fedusa general secretary Dennis George said the decreased
rate would affect inflation.
"We welcome the 8% increase.... Although the increase
will still be felt by working people, we feel that this is much better than the
16% requested by Eskom."
Agri SA president Johannes Mller said the new tariffs were
"This will be conducive towards creating a more certain
business environment in South Africa," he said.
It was to be welcomed that Nersa had taken into account
submissions made by business during public hearings on the increases, said Business
Unity SA (Busa).
"The excessively steep rises in electricity tariffs in
recent years have been damaging to growth and employment," Busa special
policy adviser Raymond Parsons said in a statement.
"[The increases have] raised the costs of doing business, and have put
many business enterprises at risk."
Parsons said the
debate surrounding Eskom's latest tariff application again highlighted the need
for more competition in the energy sector.
DA MP Lance Greyling said the decrease was a step in the
right direction for the government. "We call on Eskom to act responsibly
and take the initiative in finding other funding models and policies that will
assist in generating more cost-effective energy."
IFP MP Mario
Oriani-Ambrosini applauded Nersa for resisting pressure from Eskom to accept the
Western Cape Finance MEC Alan Winde said Eskom needed to
look at innovative ways of producing electricity.
"We expect that between 40% and 50% of wind power
projects in South Africa and 15% of solar energy projects will be set up in the
Western Cape by 2014, to provide for about 10% of our region's energy
Manufacturing Circle spokesperson Coenraad Bezuidenhout said
the tariffs were a "tremendous relief to manufacturers".
"It is a good decision that will support the
maintenance of the manufacturing base, that
will contain inflation and ensure a better future for South Africa."
Greenpeace Africa said the increase did not include the
government's new proposed carbon tax, or the negatives associated with
coal-fired electricity generation, including its effect on health and water
"The National Energy Regulator of SA (Nersa) must hold
Eskom accountable for the utility’s continued investments in coal,"
Greenpeace climate and energy campaigner Ruth Mhlanga said in a statement.
"In addition, investing in nuclear [power] as proposed
by the department of energy, would drive the price of electricity even higher
than the figures included in Eskom’s tariff increase application."
Greenpeace believed greater investment in renewable energy
was urgently required to transition South Africa to a low carbon economy, free
from coal-power pollution and the dangers of nuclear power.