• Market Watch

Govt 'intervention' can prevent power price hike in SA

• 2 Weeks Ago - 2024-10-02 00:00:00

William Brederode - South Africa’s electricity and energy minister, Kgosientsho Ramokgopa, said his ministry will put forward a "policy intervention" that would help to avert Eskom’s proposed large electricity tariff hike.
Eskom has asked the energy regulator for a 36% hike in the 2026 financial year.
Speaking at the Standard Bank Climate Summit yesterday, Ramokgopa wouldn’t be drawn on the nature of the intervention, but said it would entail suspending a current government policy for a period of five years.
"I think there could be a policy intervention that we could make to provide some degree of relief," he said.
"There are policy instruments that have got a bearing on the Eskom application that sits with us. We could simply suspend the application of the particular policy that has a bearing on the 36%."
"I am confident that it will not be the figure [36%] that you are seeing, but Eskom’s interests will still be protected," he said.

Costs
In its submission to the National Energy Regulator of South Africa (Nersa), Eskom motivated the tariff hike by citing rising operating costs as well as the increased cost of coal, along with arrear debts (municipalities owe it R74 billion) and the impact of carbon tax.
Ramokgopa also said that the proposed policy intervention would be independent of Nersa, but the suspension of the policy would allow Nersa to grant a lower tariff hike.
He said that the intervention would provide relief to everyone in the country but would be particularly beneficial for low-income households and businesses that need to remain competitive.
The details of the intervention will be announced in due course and will be submitted as part of Nersa’s public participation process on Eskom’s proposed tariff hike.

Submissions
Nersa is currently receiving submissions as part of the public consultation process for the tariff hike.
The last day for submissions is 1 November.
Eskom recently lodged its application with Nersa for a 36% increase in electricity tariffs for the 2026 financial year.
If awarded, this would result in an even larger increase for municipal electricity customers who would have prices hiked by 43.55%.
While Eskom has not received the tariff hikes it has asked for in recent years, the massive application has drawn criticism from a host of bodies.
Also speaking at the Standard Bank event, Eskom chair Mteto Nyati said affordability was the utility's "next big challenge" as the country now has energy security.
"Right now is the right time to be focusing on the affordability question."
He said renewable energy would be key to driving down the cost of electricity.

Reworking plans
Ramokgopa also recognised the need to rework key energy plans, including the Integrated Resource Plan (IRP) and the Gas Master Plan.
On the IRP, he said stakeholders who had made submissions would be brought together into one room to attempt to reach a consensus around the document, especially as it relates to the current underlying assumptions and modelling.
"It is likely going to be a substantial remake of the IRP."
He said there were "fatal flaws" in the Gas Master Plan.
"Fatal means that you must not necessarily start from scratch, but a substantial review of the gas master plan [is needed]. I think the issues of the modelling, and the assumptions do not meet the test of science." - Fin24