Eskom gets permission to recover R69bn – starting with a tariff increase

It’s not often that someone outdoes Eskom when it comes to dubious decision-making. But an almighty miscalculation from the National Energy Regulator of South Africa (NERSA) has given the utility an open goal to increase their tariffs. On Tuesday, the courts ruled that the ailing SOE could reclaim R69bn in equity.

Why Eskom will be raising their tariffs

What has been welcomed as good news by Eskom is hardly a cause for celebration for the rest of us. The verdict allows the firm to implement tariff hikes on its own terms. NERSA conceded last month that they had made an error in determining what the company was allowed to charge consumers.

This admission effectively won the case for Eskom, who are heralding this development as a chance for them to become ‘more self-sufficient’. In a statement issued on Tuesday evening, they noted that poorer customers would feel the pinch of a tariff increase more than others, and promised to ramp-up certain protections:

“Eskom welcomes this decision which allows for us to migrate to a situation where we become more self-sufficient and get ourselves in a position to recover efficient costs and reduce support from the government.”

“It is understood that certain vulnerable sectors of the economy – poor residential customers and certain industrial sectors – will require special consideration. Various measures are in place to protect the poor. Certain vulnerable economic sectors will also receive support, and we will work with NERSA on this.”

Eskom statement

NERSA may challenge the decision

The R69 billion would be accumulated over a three-year period, and despite hitting us right in the pockets, a successful recapture of these funds would go some way to clearing Eskom’s debt – the figure is roughly worth 15% of what the utility owes its creditors (around R450 billion).

Meanwhile, NERSA have stated that they may challenge the decision. You can read their statement here:

Media Statement – Judgement of the High Court of South Africa delivered 28 July 2020. pic.twitter.com/WYq0z1CZTL

— NERSA_ZA (@NERSA_ZA) July 28, 2020