- South Africa’s state owned energy utiltiy, Eskom, has announced that is has submitted its tariff restructuring application in the form of a retail tariff plan to the National Energy Regulator of South Africa (NERSA) for their consideration for implementation from 01 April 2023.
- The entire process is governed by laws and regulations of the country, including the Electricity Regulation Act and the Electricity Pricing Policy.
In their proposal to NERSA, they specified a 32.7% tariff increase plus they also propose a R938 tariff charge for solar users. Eskom did not elaborate on what they are asking for in their formal application and requests for clarification addressed to Eskom by this publication went unanswered.
This is a revised version of the plan Eskom submitted to NERSA in 2020 and takes into account the latest developments in the electricity supply industry including the restructuring and unbundling of Eskom into three entities – Generation, Distribution and Transmission. Eskom last revised its tariff structures in 2012 and is proposing these structural changes based on an updated cost-to-serve study.
The tariff restructuring is aligned to the unbundling process that Eskom is going through to accurately reflect the costs of the different services being provided, so that energy charges reflect energy costs, network charges reflect network costs and service charges reflect the cost of customer service and administration.
The implementation of the new tariff structures will reflect cost drivers more accurately, protect all customers’ interests, avoid unfair cross-subsidies, enable fair recovery of costs by all users of the grid, provide the correct economic signals while also ensuring adequate recovery of NERSA-approved revenue by Eskom.
“Existing tariff structures are outdated and need to be modernised to reflect the changing electricity environment, and crucial decisions in this regard are needed to protect the electricity industry,” said Eskom Group Executive for Distribution, Monde Bala. “For example, customers are installing their own power generators and are using the grid in different ways, and the wheeling of energy is also expanding. Fair and equitable revenue recovery from all customers for the services provided can only happen with tariffs and tariff structures that are modernised to reflect this changing environment.”
“When updating tariffs and implementing structural changes, it is not possible to have zero impact on all customers. Therefore, while the structural changes proposed will recover the revenue approved by NERSA in line with NERSA’s approved Multi-Year Price Determination (MYPD) methodology, individual customers may pay more or less, depending on the change and their consumption profile,” added Bala.
The regulator will make a decision on the proposals in Eskom’s retail tariff plan following their normal public consultation process.
Author: Bryan Groenendaal
