Hike in Electricity Tariffs approved - 8th Jul 2009

It has been made public and final that Eskom has been approved a 31.3% increase in electricity tariffs from the 1st of July 2009. This is less than the 34% which Eskom asked for but still quite a heavy increase for the public consumer.

Eskom asked for an interim increase of 34% in tariffs until it finalizes its’ financing plans. However, the National Energy Regulator of South Africa (NERSA) approved only 31.3% at this time and also reduced the time to 9 months for this interim increase.

The decision for 31.3% constituted 25% increase that was projected by NERSA in 2008 and 6.3% on inflationary count. The 6.3% inflationary count is lower than Eskom expected. When Eskom submitted the request it calculated an inflationary count at 9%. The increase itself is really 4 times higher than the current inflation rate; hence it stands to reason that both consumers and businesses are very unhappy about such a large increase.

That said it is to be remembered that some municipalities will put an additional markup on these increases, which in effect makes the increase in tariffs even greater than the 31.3% which is only the increase that Eskom was approved.

The 31.3% also included 2 cents per kw/h environmental levy on non-renewable energy sources.