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South Africa get ready, electricity prices are expected to increase significantly after the National Energy Regulator of South Africa (NERSA) admitted to procedural mistakes in its revenue and regulatory account clearing decisions where they included a R69 Billion bailout by the government as revenue.
Due to these mistakes, the energy regulator only granted Eskom price increases of 9.41% and 8.10% in 2020/21 and 2021/22 respectively but Eskom said that these tariff increases are too low and were leaving the energy supplier with a R102-billion shortfall, of which the R69 billion made up a significant portion.
Since NERSA made these mistakes leaving the power utility in such a predicament, Nersa has withdrawn its opposition to two court applications from Eskom to allow it to recover this money through electricity price increases.
This means that Eskom can now implement prices that are much higher than those prices previously approved by the energy regulator for the 2020/21 and 2021/22 financial years.
According to a report by Rapport, Eskom wants to increase the prices by up to 15%. However, the report also said that a court ruling due to be done between June and July 2020 will determine electricity prices going forward.
Eskom spokesperson Sikonathi Mantshantsha told ENCA the unfortunate situation is that electricity costs a lot of money to produce.
“By international comparisons, Eskom’s prices are much lower than they should be if you compare it to the rest of the world,” said Mantshantsha.
“You are paying about 40% less for electricity in South Africa than you would elsewhere.”
Any price adjustments will likely be from 1 April 2021 onwards, Eskom said.