Eskom says tariff hike could earn it nearly R40bn

Cape Town - Eskom could earn nearly R40bn if a 25.3% tariff increase it has requested is approved, according to the supplier’s spokesperson.

Eskom said it would also apply for other single-digit hikes in the next two financial years, spokesperson Khulu Phasiwe told reporters.

The National Energy Regulator of South Africa (Nersa) said it will meet on Wednesday to discuss whether to grant Eskom's request for a hike in electricity prices from July this year.

The utility says the rise is meant to help recoup costs incurred while running gas turbines to cope with power demand.

"The bulk of it is going to purchase diesel and then the remainder will be used for the purchase of extra electricity from the independent power producers,” Phasiwe said of the money Eskom expects to earn after the increase.

The increase requested by Eskom is made up of the 12.69% increase Nersa granted the utility in March this year, plus a 10.1% for the open-cycle gas turbines and the short-term power purchase programme as well as a 2.51% increase in the environmental levy.

The amount would include R7bn Nersa had awarded Eskom after the company spent R10bn buying diesel last year, more than three times the amount it initially budgeted.

Pricing amendments

Eskom has resorted to almost daily power cuts as it battles to meet its daily demand of about 30 000 MW and has been forced to resort to diesel-powered turbines to supplement its ailing coal-fired plants.

Eskom has until Friday to amend its pricing structure for the current financial year and wants the increases to be reflected in municipal budgets for 2015/2016 (June-July), which are due to be finalised by end-May.

"Since there is this deadline of 15 May for Eskom, the possibilities are that the energy regulator will have to come up with a decision in terms of how this is going to be treated, this week," said Charles Hlebelela, a Nersa spokesperson.

Construction at Eskom's much-delayed Medupi power station would resume on Monday, Phasiwe said. Thousands of workers at the plant have been on strike for nearly seven weeks, protesting against poor living conditions and demanding better pay.