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Eskom can hike prices by 2.2% in 2017 - Nersa

Feb 23 2017 15:06
Gareth van Zyl

Pretoria – South Africa’s energy regulator says Eskom can implement a 2.2% tariff increase for the 2017/18 period as part of a previous multi-year increase determination agreement.

Eskom is currently in the last year of what Nersa calls the ‘Third Multi-Year Price Determination (MYPD3)’ which has provided for R205bn allowable revenue for the state-owned power provider in the 2017/18 period.

This revenue is expected to cover all of Eskom’s allowed costs including a return of R33bn. The allowable revenue also includes an amount of R23bn for Independent Power Producer purchases.

Subsequently, Eskom is able to increase tariffs by 2.2% owing to adjustments made in 2015/16 of 12.7% and 9.4% for 2016/17 in line with the power utility’s Regulatory Clearing Account (RCA). 

"It's important to indicate that Nersa did not make any new decisions for Eskom for the 2017/18 period,” said Nersa chair Jacob Modise.

"Nersa did not make any new decisions. This decision was made in February 2013,” said Modise.

However, the National Energy Regulator of South Africa (Nersa) said it is “opening the door” for Eskom to make a new application for a price increase. 

Eskom currently cannot apply for a new RCA owing to recent decision by the North Gauteng High Court. The court previously set aside the regulator's decision to grant Eskom a tariff increase.

But Nersa said that Eskom can still make an application for a price hike if there are any possible cash flow risks for the company.

This application, though, will have to go through a full public participation process. 

"To the extent that we have not been able to process new RCA applications.. it is possible that Eskom may be suffering some financial harm,” said Modise.

"We are opening the door to Eskom to make an application,” he said.

Read Fin24's top stories trending on Twitter:

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