The original 15% has now gone up — here's why Eskom wants to hike prices by 32% in 2023

South Africans could face another cost-of-living shock after Eskom proposed to increase electricity prices by 32% in 2023.
South Africans could face another cost-of-living shock after Eskom proposed to increase electricity prices by 32% in 2023.
Image: 123RF

South Africans could face another hit in an ongoing cost-of-living crisis after Eskom proposed to increase electricity prices by 32% in 2023. 

The National Energy Regulator of South Africa (Nersa) is set to make a decision on the power utility's electricity tariff application on Wednesday. 

After revising its tariff application for 2023/2024 and 2024/2025, which was part of Eskom’s fifth multiyear price determination (MYPD5) originally submitted in June 2021, the embattled power utility is now seeking annual standard tariff increases of about 32% in 2023 and 9% in 2024.

Nersa approved a 9.6% increase in the standard electricity tariff for 2022/2023, which came into effect in April. The increase was about half of what Eskom requested.

Why Eskom proposed 32%?

Speaking on 702, general manager of regulation Hasha Tlhotlhalemaje said the power utility wants to see a return on assets.

Tlhotlhalemaje said Eskom made a three-year application for the multiyear price methodology but Nersa only made a one-year decision, which resulted in less than 10% of what Eskom applied for. 

“The original 15% has now gone up to 32% because of under practice,” she said. 

Tlhotlhalemaje said consumers are considered when Eskom makes the application but “costs are costs and they need to be considered by Nersa”. 

“What any regulator's role is, is to determine what the efficient cost is of producing that electricity. Nersa needs to define the efficient cost [of producing electricity] and what it would allow to be recovered by the consumer. What the consumer doesn't pay for, us as taxpayers will then have to pay through the government,” said Tlhotlhalemaje.

Load-shedding to continue

SA could have load-shedding until 2027, Eskom predicted in a medium-term adequacy report recently released. 

The report aims “to assess over a five-year period the electricity supply shortfall risks that may arise based on foreseeable trends in demand and generation capacity in SA”.

According to the document, this year has been the worst in terms of load-shedding and the situation will deteriorate as Eskom’s fleet continues to trend downwards, power stations close and demand grows.

“The worst-case scenario shows the energy required to restore the system to adequacy is 18 terawatt-hour (TWh) in 2023, increasing to 30 TWh in 2027. The energy gap of 18 TWh in 2023 is equivalent to Matla Power Station production at full load,” said the report. 

The worst-case scenario will also see the energy supply gap increase by 40% over the next five years. 

Eskom will have a negative outlook for 2023 to 2027 if its fleet shows no signs of new or improved generation capacity, the report predicted. 

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