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Firms face double electricity winter tariff whammy - analyst

May 16 2017 09:46

Cape Town – In addition to annual municipal electricity tariff hikes, South African businesses and industrial electricity users will pay extra for power when Eskom implements its anticipated winter rates between June and August, according to an energy specialist. 

Rhino Lighting MD Heather McEwan said in a statement these consumers will see their energy bills go up in the winter months. “But it’s not only because they are consuming more electricity, but also because they are paying more per kilowatt-hour.” 

The power utility is expected to charge energy users more per kilowatt-hour for electricity usage in the months between June and August. 

In addition, annual municipal electricity tariff increases also come into effect in July, McEwan said.

READ: Eskom can hike prices by 2.2% in 2017 - Nersa 

“Businesses’ electricity bills will increase even further in July, when the annual increase kicks in on top of the winter prices. So, after August, when the winter rates fall away, they will still be paying more for electricity due to the annual escalation.”

In February, the National Energy Regulator of South Africa (Nersa) approved a maximum 2.2% electricity tariff increase for Eskom for the 2017/18 financial year as part of a previous multi-year increase determination agreement. 

Eskom is currently in the last year of the Third Multi-Year Price Determination (MYPD3), which has made provision for R205bn allowable revenue for the state-owned power provider in the 2017/18 period.

Nersa has however capped municipal electricity tariff hikes at 1.88%.

READ: Eskom's electricity price hikes 'excessive' - Dentons 

“In effect, Eskom sells electricity at wholesale prices to municipalities, which in turn add their own ‘retail mark-up’ when reselling to consumers,” McEwan said. Municipalities are allowed to contest the decision until June 1. 

Eskom could also still contest the Nersa ruling, which acts as a handbrake on spiralling energy costs, McEwan said. “Even so, it has allowed an average annual price increase of 18.1% since 2008, and costs will continue to rise in the future.”

Fin24 earlier reported that Eskom is still allowed to make a new application for a tariff increase if there are cash flow risks for the power utility. Such an application however will have to go through a full public participation process.

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nersa  |  eskom  |  electricity costs  |  energy


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