Eskom to study Nersa's decision

Pretoria - While taking note of the National Energy Regulator of South Africa's (Nersa) decision to grant it a 24.8 percent tariff increase in 2010, Eskom says it will further study the price determination.

"Eskom notes the announcement that it will be awarded a 24.8, 25.8 and 25.9 percent tariff increase for the periods 2010/11, 2011/12 and 2012/13 respectively," the power utility said on Wednesday.

Eskom's acting chairman, Mpho Makwana, said they were currently studying the full details of the determination and were in consultation with key stakeholders. "We will make further comment on the determination and its specific implications," he said.

Commenting on the keenly anticipated decision, Energy Minister Dipuo Peters said: "We have noted the decision of the regulator. We respect the decision taken by the regulator."

Peters said it has become necessary to conclude the price path for the electricity industry in order to eliminate the uncertainty around the funding of the capital programme for the sector.

"This has become even more urgent, particularly given the fact that there are indications already that we are coming out of the recession as indicated in the figures released this week," she said.

The regulator said the tariffs will apply as of 1 April each year amounting to revenue of R85 billion, R109 billion and R141 billion for each year respectively.

This results in the average standard price of 41.57 cents per kilowatt hour for 2010/11, 52.3 cents per kilowatt hour for 2011 to 2012 and 65.85 cents per kilowatt hour for 2012/13.

The parastatal had initially sought a 45 percent tariff increment over its Eskom's MYPD2 period but in December this was revised to 35 percent to help fund its expansion programme.

Commenting on the tariff increase, Nedbank economist Carmen Altenkirch welcomed the news from an inflation point of view.

"We welcome it although it will still contribute roughly 0.45 percentage points to inflation, in comparison with 0.65 percentage points had Eskom been granted a 35 percent increase.

"This decision also makes it less likely that inflation will breach the target band again this year," she said.

Meanwhile, Cosatu expressed anger at the regulator's decision. "These increases are more than four times the current rate of inflation and totally unacceptable for individual consumers, especially the poor," it said.

The South African Chamber of Commerce and Industry (SACCI) said the increases matched general expectations from business but it was still fairly high given current economic circumstances.

"Nersa appears to have taken the views of respondents at the public hearings into consideration.

"Notwithstanding the certainty that is given by this decision, SACCI estimates that approximately 250 000 jobs will be lost as a consequence and it will be a factor in CPI remaining outside the target range," it said. - BuaNews