TARIFF INCREASE
How Eskom's price calculation is misfiring
The future price of electricity is based on an inaccurate sales prediction made five years ago
Electricity price increases in SA have been significantly above inflation for the past decade. For the middle class this is a nuisance, but for low-income households and energy-intensive industries, it is a much more serious problem. The first hearing for Eskom’s revenue application for 2018-19 was held in Cape Town on October 30 with the National Energy Regulator of SA (Nersa). It dealt with the thorny issue of its request for a 19.9% standard tariff increase. Since this is just the average increase, it will translate to about 27.5% for municipalities. Civil society, community members, local government and analysts provided comment for consideration. The Eskom document under discussion is 163 pages long, with some fairly technical components and complex mathematical formulas. But this process is missing the point of what urgently needs to be done. Nersa provides a multiyear price determination (MYPD) methodology, and the latest version is from October 2016. This methodology is the ...
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