Tariffs

Municipal electricity tariff increase yet to be approved, says Salga

Municipal electricity tariff increase yet to be approved, says Salga

17th May 2019 BY: SIMONE LIEDTKE 
WRITER

The South African Local Government Association (Salga) on Friday said the municipal electricity tariff for the 2019/20 financial year is yet to be approved.

The association said that, contrary to information in the public domain about a more than 15% increase in municipal electricity tariffs, as a result of the tariff increases granted to Eskom by the National Energy Regulator of South Africa (Nersa), earlier this year, the proposed 15.23% increase was still only a guideline provided by Nersa.

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 “The confusion and consequent panic both for the public and municipalities, respectively, is premature and regrettable,” the association said in a statement.

On a yearly basis, Nersa approves a percentage guideline increase and reviews the municipal tariff benchmarks, which Nersa is yet to decide on, it added.

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Municipalities still need to submit applications to Nersa for proposed tariffs to be charged to their customers. The guideline increases assist municipalities in the preparation of their budgets for the ensuing financial year, while the revised benchmarks are used in the evaluation of the municipal tariff applications.

According to Salga, it also assists municipalities on how they would pass through the Eskom increase, considering the different starts to the financial years of Eskom and municipalities.

The reason for the higher pass-through tariffs in the municipalities’ guidelines is owing to misalignment of financial years for the implementation of tariffs between Eskom and the municipalities, Salga noted.

Earlier this year, Nersa decided on Eskom’s fourth Multi-Year Price Determination, wherein it subsequently approved Eskom’s Retail Tariff Structural Adjustments, on March 13, to be at 13.07%.

From April to June, Eskom will, as per the start of its financial year, start collecting on its 13.07% increase, while municipalities will continue collecting on the previous year's tariffs until the beginning of their new financial year, which is July 1.

From this date, therefore, the municipalities will be implementing tariff increases that allow them to claw back the under-recovery for the months of April, May and June. 

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