tariffs
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Once again, South Africa’s power utility will make customers pay for its poor business management through increased electricity tariffs.

Originally published in the ESI Africa weekly newsletter on 20/05/2020

The country’s energy regulator, NERSA, is allowing Eskom to recover R13.3 billion from customers for electricity supplied in the 2018/19 financial year.

However, the utility’s general manager for regulation, Hasha Tlhotlhalemaje, said this situation could have been avoided if previous increases had not been deferred to a later stage.

“If NERSA had made a correct decision in the initial stages, then there would not have been such a difference between what is efficient and what was allowed in the decision,” said Tlhotlhalemaje.

This attempt to deflect responsibility does not augur well as the staggering amount afforded to the utility is far lower than the R27.3 billion applied for by Eskom. It implies that customers can expect another increase in the near future.

There is no way around the electricity tariff increase as Nhlanhla Gumede, a regulator member, explained: “You may look back as a regulator and say ‘perhaps some of those costs could have been prevented, perhaps as Eskom you could have been a little bit more prudent’, but the fact is, we incurred that cost, so what do we do?”

The situation is ludicrous particularly for a company holding the market monopoly, and that has state-backing can be cash-strapped—especially when the product and service they offer is an essential item for everyone and all business sectors.

As Eskom supplies more than 90% of South Africa’s electricity, there is nowhere for the majority of customers to turn to, unless drastic changes are implemented to regulation. Imagine the possibilities afforded to end-users where an open market of sorts gives consumers the luxury of choice.

Notably, the minister of mineral resources and energy, Gwede Mantashe, has acknowledged the importance of this need for change. According to the minister, his department is already opening the way for municipalities to buy power from independent power producers.

Do you feel confident that this will transpire in 2020 and in a way that guides the power utility toward a profitable business model? Share your thoughts on our social media platforms (see below).

Stay safe! Until next week.
Nicolette