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Seth Rotherham
  • Why The Price Of SA’s Electricity Will Soon Spike

    29 Jul 2020 by Carrie in Business, Lifestyle, South Africa
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    [imagesource: Kim Ludbrook/EPA/ Adobestock]

    Back in May Eskom, via chief operations officer Jan Oberholzer and CEO Andre de Ruyter, confidently told South Africans that the lockdown had provided an opportunity to carry out “short-term opportunistic maintenance”, which addressed some of the most pressing issues related to the national power supply.

    This was followed by load shedding smack bang in the middle of a cold front in July, with a significant portion of the country working from home, relying heavily on electricity and the internet to do so.

    Eskom is also one of the SEOs that has been bleeding the country dry over the past few years.

    Massive losses, power stations that don’t function, and corruption in the ranks all contributed to the problem.

    Sorry to be the bearer of bad news, but you’re going to have to pitch in to fix things, whether you like it or not.

    The Johannesburg High Court has ruled in favour of Eskom, allowing them to claw back R69 billion over the next three years, by charging South Africans higher electricity tariffs.

    In the court case, Eskom was disputing a decision by energy regulator NERSA, to deduct the R69 billion equity injection given to it by the government for the 2019/20, 2020/21, and 2021/22 financial years.

    MyBroadband reports:

    Eskom has previously indicated that this amount would be recouped through electricity price hikes, which it will now be able to apply for as a result of this judgement.

    Eskom told MyBroadband that reports claiming it wanted to increase prices by 15% next year were correct.

    Any price adjustments will likely be from 1 April 2021 onwards, Eskom said.

    From April next year, we’re all looking at an extra 15% cost to keep the lights on.

    For cash-strapped households struggling as businesses shut down, jobs are lost, and salaries are cut during the national lockdown, this could be a massive blow.

    Eskom, on the other hand, is very pleased with itself.

    “The Judgement that has been delivered is very encouraging,” said Eskom chief financial officer Calib Cassim.

    “It aids in instilling confidence in the regulatory regime within the country by ensuring that the NERSA methodology is adhered to.”

    “This Judgement will assist Eskom in paving the way forward towards financial sustainability,” Cassim said.

    You can read their full press statement, here:

    #ESKOM #MEDIASTATEMENT

    Eskom welcomes the High Court decision that allows for phased recovery of the R69bn equity
    injections pic.twitter.com/5tHq4toHOk

    — Eskom Hld SOC Ltd (@Eskom_SA) July 28, 2020

    Eskom says that the price hikes won’t affect vulnerable sectors of the economy which will be singled out for targeted support, including poor residential customers and certain industrial sectors.

    The problem here is that, as the pandemic affects livelihoods, what is and isn’t considered a ‘vulnerable sector of the economy’ could look very different in the coming months as the lines are redrawn in certain sectors.

    The hospitality, tourism, alcohol and restaurant industries could arguably be considered vulnerable sectors, due to massive losses, and the inability to claw back revenue under the hard restrictions imposed by the NCCC.

    How Eskom handles this going forward is going to make all the difference to how the South African public responds.

    If history is anything to go on, it’s not going to be pretty.

    [source:mybroadband]

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