Eskom applies for a 15% electricity tariff increase (only a VERY small part of Eskom’s claimed cost increases is due to renewables)

Mo Anton Eberhard commented: “Just to be clear, a VERY small proportion of this is attributable to independent power producers. Most of it is @Eskom_SA ’s burgeoning debt (due to runaway costs building its mega coal power stations) plus above inflation coal and payroll costs.”
Eskom applies for 15% tariff increase <>The utility has submitted its price application to the National Energy Regulator of SA 22 OCTOBER 2018 – 14:15 CAROL PATON UPDATED 22 OCTOBER 2018 – 18:05 [image: Picture: REUTERS] <> Picture: REUTERS
Eskom has asked the National Energy Regulator of SA (Nersa) for a 15% tariff increase for the next three years, beginning 2019-2020, the utility announced on Friday.
While Nersa, which will hold public hearings and evaluate the application, seldom grants Eskom its full request, Eskom’s application indicates that double-digit electricity increases will very likely continue into the next three years.
Electricity prices rose 350% in the 10 years prior to 2017, compared to inflation which was 74% over the period.
High electricity prices are viewed as a drag on economic growth and have been a key driver of inflation. With the SA Reserve Bank forecasting inflation to rise in the short-term, an Eskom tariff that outstrips inflation may lead to a rates increase in 2019.
Nersa evaluates Eskom’s tariff application according to a methodology that allows the company to claim a return within certain limits and scrutinises costs to ensure they are justifiable. The Nersa methodology also allows Eskom to claw-back justifiable costs retrospectively by adding them to tariffs for future years.
For the next three years Eskom will be permitted to clawback an additional R8bn from customers as a result of the adjudication of the regulatory clearing account (RCA) for the years 2014-2015, 2015-2016 and 2016-2017.
On Eskom’s current tariff this amounts to approximately an additional 4.41%, which will be added to the tariff. That means that should Eskom be granted its price application in full, tariffs in 2019-2020 will rise 15% plus the 4.4% allowed for by the RCA.
Eskom is in deep financial trouble with falling sales, a declining ability to meet debt obligations and tariffs which are not cost-reflective. With debt of more than R350bn and rising it faces and interest bill of R215bn over the next five years.

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