5.23% Eskom increase a bittersweet victory to South Africans

This means the average price stays under R1/kWh.

“This is a bittersweet victory for civil society. It’s much better than Eskom’s requested 19.9%, but we believe it should have got 0%,” says Ben Theron, OUTA’s Chief Operating Officer.

“We cited an ongoing decline in efficiencies, maladministration and corruption, combined with a lack of leadership accountability over the past decade, which had given rise to unwarranted increases for far too long.”

NERSA approved R190.348bn allowable revenue for Eskom, meaning an average increase of 5.23% and taking the average price of electricity from 89.13c/kWh to 93.79c/kWh. Eskom had asked for R219.514bn in revenue, which would have meant a 19.9% price increase taking it to an average of 106.87c/kWh.

The Organisation Undoing Tax Abuse (OUTA) believes that Eskom does not listen fully to NERSA’s advice on costs and NERSA does not listen fully to the public on corruption and affordability.

“More than 23 000 people participated in the public engagement this year. It is critical for people to get organised and participate in the government’s decision-making processes and hold government accountable. This is one of the fundamentals of our Constitution and we hope to see more active citizens in the new year,” says Theron.

Ominously, today’s pricing decision is forward looking (for an increase to Eskom customers from April 2018) and does not include Eskom’s regulatory clearing account applications for the last three years which NERSA is still to consider; this could mean further increases. It also does not include the municipal increase to their customers, as this process will now follow. OUTA will keep a watch on those processes too.

OUTA welcomes the NERSA cuts to Eskom’s planned primary energy bill, the independent power producer budget (which Eskom had been obliged to admit was wrong during the price process) and depreciation, but questions the addition to the return on capital.

Most of all, OUTA salutes the South Africans who sent an unprecedented 23 000 submissions to NERSA, the strongest public input ever on an electricity pricing decision: we don’t believe there were many supporters for Eskom’s increase in that collection.

OUTA had opposed the Eskom application, filing a lengthy written submission then later making presentation to NERSA, demanding a 0% electricity tariff increase.

“NERSA had the opportunity as the regulator to prove that they are not captured. The fact that they are proceeding with an increase raises some serious red flags. As the regulator, they must ensure that consumers are treated fairly. The economy depends on them,” says Theron.