Electricity tariffs are likely to soar over the next three years, with businesses and “the affluent” likely to face the steepest increase.
Eskom has won its legal battle against the National Energy Regulator of South Africa (Nersa) regarding a cash injection (bailout) of R69-billion received from government. The regulator had ruled that the R69-billion bailout should be considered as revenue income, with the power utility denied. Now, the High Court has sided with Eskom, forcing Nersa to authorise even higher electricity tariffs.
The High Court judgement requires Eskom to recover the R69-billion, in a phased manner over a three year period. This meas that Eskom can recover an additional R69-billion from its users over the next three years, over and above previously approved tariff increases.
Eskom was naturally pleased with the court’s decision, saying that this judgement will assist the utility to achieve financial sustainability.
The court said that Eskom’s standard tariffs, which had been approved by Nersa for the 2021/2022 financial year, will increase from 116,72 c/kWh to 128,24 c/kWh. This equates to an additional 9,87% (almost three times the official rate of inflation) over and above the increase already allowed by Nersa for this period.
The utility says it recognises that vulnerable sectors of the economy, such as poor residential customers and certain industrial sectors, will require special consideration. Apparently, various measures are already in place to protect the poor. This means that in all probability, an even higher increase will be levied on businesses and “the affluent”.
This does not mean that load shedding will end. We can anticipate higher tariffs and the costs associated with an unreliable national electricity grid. The root cause of load shedding is that Eskom’s ageing coal-fired power stations have been poorly maintained, making them unreliable. Ongoing equipment breakdowns with the resultant loss of generating capacity is inevitable.
Recently, Eskom reported that six of its generating units had failed, and at the same time, two of those which were to be returned to service after repairs, were not ready to be returned to service. The utility therefore runs the plant which is operational very hard to keep the lights on. But this means that those plants miss their scheduled maintenance and so the failure cycle continues.
Until the government increases the number of independent power producers and allows them to produce far more electricity than they currently can, we will remain reliant on Eskom – with its ever increasing electricity tariffs and load shedding apologies.
There has never been a better time to invest in small-scale embedded generation. If you are a corporate, its time to seriously consider a mini-grid with solar panels and battery storage; if you are a smaller business or residential estate manager, a rooftop solar PV solution will not only mitigate against high tariff increases, but would also shield your residents from the horrors of load shedding.