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Green light for Eskom tariff hikes

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Eskom received a lifeline in the February budget speech of R23 billion every year, for the next three years, from National Treasury.

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CITY residents can brace themselves for even higher electricity bills after the National Energy Regulator (Nersa) announced yesterday that it has given the green light to Eskom’s application to hike electricity tariffs by an average of 3.5% above inflation for the next three years.

From April 1, consumers can expect to pay 9.41% more for electricity. In 2020, the cost of electricity will increase by 8.1% and a further 5.22% in 2021.

Nersa made the announcement yesterday following Eskom’s application for price hikes of 17.1% for 2019/20, 15.4% for 2020/21 and 15.5% for 2021/22.

Nersa chairperson Jacob Modise said the regulator received 119 000 written comments on Eskom’s application and held public hearings in seven out of the nine provinces. The Northern Cape and Limpopo were skipped during the hearings.

The 2019/20 increase is on top of the 4.41% hike, approved for the year because of Nersa’s decision last year on Eskom’s Regulatory Clearing Account (RCA) application. The RCA refers to funds Eskom can recover due to an electricity shortfall or an escalation in operating costs.

Eskom, which is R420 billion in the red, received a lifeline in the February budget speech of
R23 billion every year, for the next three years, from National Treasury.

Nersa has previously rejected Eskom’s applications for big tariff hikes. In December 2017, the regulator denied a 9.9% tariff hike application and instead approved only 5.23%.

The DA has condemned Nersa’s decision, saying the massive increase will “eat into the already diminished incomes of the poor and lower income groups.

“Over a period of 10 years from 2007 to 2017, Eskom’s electricity prices have increased by about 356%, whilst inflation over the same period was 74%.”

The party says the increases will “have a detrimental impact on small businesses, manufacturers and intensive electricity users, placing a handbrake on economic growth and job creation”.