June 28, 2020

How a ‘R69bn mistake’ could see our electricity prices skyrocket

How a 'R69bn mistake' could see our electricity prices skyrocket


The National Energy Regulator of South Africa (Nersa) has admitted to making ‘procedural mistakes’ when they determined the rate Eskom must raise their tariffs by. The group is now withdrawing its opposition to two court cases raised by the utility, and it could have catastrophic consequences for our electricity bills.

Eskom likely to hike electricity prices

Last year, Eskom fought tooth and nail to secure price increases of up to 16.7% by 2022. Nersa, however, only granted them permission to institute an 8.1% hike – less than half of what they had asked for. But, according to Rapport, the process of deciding what Eskom could charge seems to be flawed.

Without revealing too many details, Nersa essentially failed to take into account a number of key details before handing down their final terms in 2019. Eskom has already won one High Court appeal against the regulator, and the odds have swung back in their favour regarding another potential legal victory.

The R69 billion mistake: What has Nersa done wrong?

It’s understood that Nersa considered Eskom’s R69 billion bailout money as ‘revenue’ – something vehemently disputed by the energy giant. They say that this calculation has now left them with a projected shortfall of just over R100 billion.

The case has been referred back so the mistake can be rectified. This, by the way, is on top of another R22 billion revenue projection that Nersa initially rejected before reviewing.

How much more might we pay for electricity?

What does it all mean? Well, it almost certainly guarantees that our electricity prices will rise by much more than first feared. Eskom is chasing a 30% increase, saying that this will be ‘cost-reflective’ of their operations.

At a time where money is going to be scarcer than ever before for the South African consumer, the advent of a large rate rise is the last thing anyone wants to deal with. But Eskom is more than happy to capitalise on any mistakes made by their regulator, especially if it means they can charge more for electricity.





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