Confirmed: Eskom to increase electricity tariffs ‘after lockdown’

Eskom has been granted permission to increase electricity tariffs in an attempt to recoup R13 billion. The increase is expected to be finalised by September 2020.

As the majority of South Africans remain excluded from the work environment, due to COVID-19 and the subsequent lockdown, financial pressures continue to mount.

The National Energy Regulator’s (Nersa) recent confirmation of a hike in electricity costs will do little to ease consumers’ economic burden.

Eskom to recoup R13 billion from consumers

Eskom, which has been plagued by corruption, mismanagement and a disastrous maintenance programme, will be looking to recoup its grievous financial losses by way of traffic increases. This comes after Eskom issued Nersa with a series of legal challenges, the most important of which relates to the Regulatory Clearing Account (RCA) for the 2018/2019 financial year.

Eskom argued that it had been short-changed during Nersa’s initial RCA review process, leaving the embattled power supplier with a higher deficit. The challenge, which dragged on for months after Eskom recorded its highest-ever net loss, has finally been settled. The Energy Regulator noted that Eskom would be entitled to:

• An RCA balance of R13.2 billion
• Recover the RCA balance from standard tariff customers, local Special Pricing Arrangement (SPA) customers and international customers

When will new electricity tariffs become effective?

Nhlanhla Gumede, representing Nersa, noted that the revised electricity tariffs would only be finalised through a consultative process. Gumede added that while the process was due to begin immediately, a final decision on the cost-to-consumer would likely be made before September 2020.

Coincidentally, South Africa’s COVID-19 caseload is expected to peak in September. As the nation prepares to enter more relaxed phases of lockdown, the return to ‘normal’ can only be assessed once the worst is over.

This means that after surviving one crisis, consumers are likely to be hit with a fierce rise in electricity costs.

Will Eskom handle Level 3 lockdown?

Eskom’s tariff increase approval comes amid further concern that the power utility may struggle to cope with the heightened demand for electricity during Level 3 lockdown. Recently, Deputy President David Mabuza met with the Eskom Task Team to gauge its response to the potential of most industries returning to work.

Prior to lockdown, Eskom was generally unable to meet the country’s power demands and, as a result, implemented a recurring load shedding strategy.