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Electricity and petrol price increase no April Fool's joke

Mar 22 2015 13:00

Cape Town – It won’t be an April Fool’s day joke next month when both petrol and electricity tariffs go up, directly affecting consumers' pockets.

Eskom announced price increases for its customers at midnight on Friday, while experts have warned of hefty petrol price increases next Wednesday.

Eskom said direct customers will receive a 12.69% increase on April 1, while municipality customers will get a 14.25% increase from July 1, as approved by the National Energy Regulator of South Africa (Nersa).

Meanwhile, the price of petrol could go up by as much as R2 per litre in April, warned Dawie Roodt, economist of the Efficient Group.

The department of energy is set to announce the fuel price adjustment for April this coming Friday.

"Taxes and a higher road accident levy will add 81 cents to petrol, while a (mostly) weaker rand could add as much as a rand. In total petrol could, therefore, go up by as much as R2 per litre. The good times lasted too briefly," Roodt told Fin24.

Read: Petrol price could go up by R2 in April

Eskom said even more increases could be on the cards.

Eskom is looking for a 9.58% price adjustment for electricity in addition to the already announced 12.69% imposed in the 2015-16 financial year, reports the City of Cape Town.

If Eskom’s application was approved, the City of Cape Town noted, this would result in “a staggering 22.27% increase in bulk electricity tariffs in just one financial year, which the city will have no option but to pass on to our own customers”.

Read: Eskom's tariff hike shocker

“[Financial] constraints have necessitated Eskom to explore options for further review of tariff increases for the 2015/16 financial year,” Eskom said in a statement on Friday evening. “Submissions in terms of the Multi-Year Price Determination (MYPD) methodology have been made to Nersa in this regard.”

“Eskom’s current financial position, as a result of historical non-cost reflective tariffs and the lag in recovery of eligible expenditure, does not afford Eskom’s balance sheet the ability to pre-fund further costs that are necessitated by a constrained power system such as short term power purchases from independent power producers and municipal generators and the increased use of open cycle gas turbines.”

Eskom said it had initiated a selective reopener of the MYPD 3 application from the 2015/16 financial year onwards that proposes an adjustment in the tariffs.

“This is due to costs incurred securing further short term power purchases and increased use of open cycle gas turbines,” it said.

“In terms of the Municipal Finance Management Act (MFMA), Eskom is required to first consult with the National Treasury and the South African Local Government Association (SALGA) prior to submitting to Nersa for consideration. Eskom will consider these comments before submitting to Nersa. Nersa will then follow their normal governance processes before making a decision.

“Further, the announcement by the minister of Finance in the Budget Speech of the proposed increase in the environmental levy is yet to be promulgated. This will have an impact on the required tariff and as such Eskom will need an adjustment in terms of the tariffs due to the levy.”

nersa  |  eskom  |  petrol price

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