10 October 2012 – One of the dilemmas facing Eskom and the National Energy Regulator of South Africa (Nersa) is how to manage tariff increases to ensure the country’s electricity pricing is cost reflective. Eskom has been discussing internally whether the target of making electricity cost reflective in five years is feasible, taking into account the need to balance this with the country’s economic needs.

Eskom says that while the average price per kilowatt hour is ZA60c it needs to be 90c to cover the cost of its new build programme and interest of about 10% on borrowings set to reach R350 billion by 2015.

Nersa has indicated it is receptive to argument that the price needs to become cost reflective by 2018, the end of the five-year period covered by the MYPD3 tariff application. Nersa will announce its final decision in February 2013, following an extended period of consultation and public hearings.