Cape Town – South Africans will have to brace themselves for further increases in the cost of electricity after National Energy Regulator of South Africa (Nersa) approved Eskom’s 18.49% price hike to municipalities.
Cape Town Mayor Geordin Hill-Lewis has said that Eskom’s Nersa-approved 18.49% price hike is unfair, unaffordable, and unjust for residents struggling with the rising cost of living.
Nersa announced on Thursday the increase percentage for municipal bulk purchases of electricity.
The news comes after its meeting held on 10 March 2023. The Energy Regulator made a determination on Eskom’s Retail Tariff and Structural Adjustment (ERTSA) application and approved an average tariff increase of 18.65% for Eskom’s standard tariff customers and an increase of 18.49% for municipalities.
“Key industrial and urban customers will realise an 18.65% increase plus an additional 7.37c/kWh to cater for the subsidy, which increases from 5.69c/kVVh resulting in a 29.53% increase. Homelight 20Amp customers will realise a lower increase of 10%,” Nersa said.
Municipalities will realise a lower increase of 18.49% because, in the first three months (April to June) of Eskom’s financial year, they will not experience an increase, as their financial year commences on 1 July every year, Nersa said.
“The municipalities cannot increase their tariffs in the middle of their financial year, as it would not correspond with the revenue to be achieved from licensed municipal distributors.
“In this regard, Eskom will over-recover revenues in the first three months (April to June) of its financial year, hence municipalities will only experience an increase of 18.49% as opposed to the 18.65% that the rest of Eskom’s customers will see,” the energy regulator said.
“The 1 July implementation date for municipalities is in accordance with the requirements of the Municipal Finance Management Act, 2003 (Act No. 56 of 2003). The increase for Eskom’s standard tariff customers will be effective from 1 April 2023 and for municipalities from 1 July 2023.”
The City of Cape Town said that the increase underscores how important and urgent it is for the City to reduce reliance on Eskom, and stop the “outrageous increases every year”.
The City is planning to lessen reliance on Eskom’s increasingly unaffordable electricity by buying power on the open market.
Cape Town’s three-phase procurement for load shedding protection has reached several important milestones this month.
“The largest procurement – a 500MW tender to buy power on the open market – is on track to open on 29 March 2023.
“Besides bringing more affordable power into the Cape Town grid, the aim is to provide at least four stages of load shedding protection progressively over the next three years under the Mayoral Priority Programme to end load shedding over time,” the City said.
Mayor Hill-Lewis meanwhile said that Eskom’s increase to municipalities comes at the worst possible time, with so many South Africans struggling with the rising cost of living.
He said the public is being forced to pay for corruption and mismanagement at Eskom in “the most unfair, unaffordable and unjust way”.
“That is why in Cape Town we are working to end our Eskom reliance and diversify energy supply to more affordable power sources.
“Approximately 70% of the City’s income from the sale of electricity goes toward buying bulk electricity from Eskom, and the remaining 30% goes toward a reliable electricity service, healthy grid infrastructure, and the programme to end load shedding over time,” Hill-Lewis said.
“In crunching the numbers for our upcoming budget, we are working hard to cushion especially the poorest residents from this massive Eskom increase as far as possible, while also funding our programme to end load shedding and reduce sole reliance on expensive Eskom power as fast as possible,” said the mayor.
Nersa said The Reasons for Decision document will be available on its website at wvvw.nersa.ora.za in due course.