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Opinion

Electricity prices: The only way is up! (a bleak but honest outlook for tariffs)

11 February 2020 10:22 AM
Tags:
Eskom
Nersa
Electricity
Electricity tariffs
Refilwe Moloto
National Energy Regulator of South Africa
Terence Creamer
Engineering News
The reality is someone – either electricity consumers or taxpayers – will pay more, laments Terence Creamer (Engineering News).

The High Court on Monday rejected Eskom’s application for the energy regulator (Nersa) to urgently consider its request to double electricity prices.

The debt-laden state-owned utility wanted the court to annul Nersa’s multi-year price determination decision.

Nersa has agreed to a tariff increase of 8% in this financial year and 5.2% in the next one.

Eskom says Nersa erred by recording the latest taxpayer bailout of R69 billion as revenue.

Picture: Pixabay.com

If Eskom has its way, it would be refunded the R69 billion or R23 billion per year over the next three years through a higher tariff.

Sikonathi Mantshantsha, spokesperson - Eskom

If Eskom won, it would’ve had permission to hike electricity tariffs by 17% this year and by another 17% next year.

Refilwe Moloto asked Terence Creamer (of Creamer Media's Engineering News) to explain what the latest court ruling in favour of Nersa against Eskom means for the price of electricity.

There won’t be any [tariff] adjustment immediately. But it hasn’t been set aside entirely. The battle has been won by Nersa, but the war continues… Eskom is looking to set aside the multi-year price determination… The judge did say the treatment of the bailout as revenue does seem questionable…

Terence Creamer, Editor - Engineering News

There is still a potential for an upward adjustment of the tariff… We’re not totally out of the woods, even for this year… We can expect an upward adjustment in the tariffs… We as taxpayers are vulnerable… a number of bailouts have already been announced… It’s either the user or taxpayer that pays more…

Terence Creamer, Editor - Engineering News

The cheapest form of new electricity is wind, solar and flexible generation. But that doesn’t mean it’s going to be cheaper than the amortised [initial cost has been written off] coal fleet that’s been running for many, many years… The trajectory of tariffs is upwards. It’s just the rate of change that we can moderate by making the right electricity choices…

Terence Creamer, Editor - Engineering News

For more detail, listen to the interview in the audio below.

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11 February 2020 10:22 AM
Tags:
Eskom
Nersa
Electricity
Electricity tariffs
Refilwe Moloto
National Energy Regulator of South Africa
Terence Creamer
Engineering News

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