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Eskom gets nod to increase prices

Johannesburg - Eskom has been given permission to raise electricity prices next year above the 8% previously granted, the energy regulator said on Wednesday.

The adjustment should enable Eskom to recover R7.8bn in revenue from consumers after its costs exceeded projections between 2010-2013, said the National Energy Regulator (Nersa).

Eskom wanted to increase earnings by R18.4bn.

Annual inflation

"There will be a tariff adjustment next year. It will be 8% plus whatever percentage adjustment they need," said Nersa spokesperson Charles Hlebela.

"The percentage tariff adjustment that this will result in has not yet been determined and it has not yet been concluded whether it will be a once-off adjustment or not," Hlebela added.

Higher power tariffs are likely to stoke annual inflation in South Africa, which stood at 6.6% in June.

The Reserve Bank raised interest rates for the second time this year two week ago, balancing concerns about weak economic growth against rising prices.

Revenue shortfall

"Larger tariff increases are not in the Reserve Bank's baseline but are in their risk skews on inflation," said Peter Attard Montalto, economist at investment bank Nomura.

Eskom was granted tariff hikes in early 2013 of up to 8% over a five-year period, half the 16% it had been seeking. The utility firm has said it expects a revenue shortfall of up to R225bn for the next four years.

Eskom has been raising rates as it scrambles to build new power stations to keep the lights on and meet rising electricity demand.


 

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