Energy regulator to start hearings on electricity tariffs

Power lines feed electricity to the national grid

Power lines feed electricity to the national grid from Koeberg Nuclear Power Station. (Photo by: Education Images/UIG via Getty Images)

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The National Energy Regulator of SA, which sets prices and tariffs for power utility Eskom, will on Monday start a series of nationwide public hearings on what South Africans will be paying for electricity.  

Over the course of three weeks, Nersa will hold hearings on what the debt-laden power utility will get to charge for electricity in years ahead, and what it can recoup from shortfalls in 2017/18.

The hearings commence on Monday in Cape Town. The energy price regulator will hear from, among others, Eskom chief financial officer Calib Cassim, a representative of the the SA Local Government Association, advisors to the mining and energy industry, and representatives from The Organisation Undoing Tax Abuse (Outa).

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The hearings continue in Cape Town on Tuesday, with members of the public set to testify, before moving on to Port Elizabeth in the Eastern Cape. 

Hearings will wrap up in Gauteng in late January or early February. The regulator will announce its decision on March 1. 

Eskom announced in October 2018 that it has asked Nersa for a 15% tariff increase per year for the three financial years. The regulator has in the past at times not granted the full tariff increases Eskom has asked for.

Eskom said it wants Nersa to allow revenue of R219bn for 2019/20, R252bn for 2020/21 and R291bn for 2021/22. For this to occur, it would need an increase of 15% a year, said Eskom.

Debt and load shedding

The national power utility is about R420bn in debt and has been seeking ways to reduce its liabilities.

In mid-December President Cyril Ramaphosa appointed a task team to advise government on how to resolve the power utility’s operational, structural and financial challenges.  

In late 2018, it was forced to implemented load shedding due to a combination of factors including plant breakdowns, urgent plant maintenance, lower-than-expected output from the Medupi and Kusile coal-fired power stations,and damage to the power transmission lines linking South Africa to the Cahora Bassa hydroelectric dam in Mozambique.

Although it was able to keep the lights on over Christmas and New Years due to lower demand from business and industry, Eskom has said that load shedding may again be on the cards in early January. 

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