Eskom’s proposed 20.5% electricity tariff hike set for this year would be exorbitant and have a detrimental effect on Tshwane residents and further weaken the struggling revenue of the metro.
These were the sentiments of Tshwane mayor Randall Williams who was amongst municipality leaders that have voiced their dissatisfaction over the power utility’s proposed electricity tariff increase for the 2023 financial year, which commences on April 1. Municipal consumers electrify tariff changes commence from July 1.
“The City of Tshwane rejects the excessive tariff price hikes that are being proposed by Eskom,” Williams in a statement on Monday. Eskom CFO Calib Cassim, in a National Energy Regulator of South Africa (Nersa) public hearing presentation on Monday on Eskom’s fifth multi-year price determination (MYPD 5), attributed factors affecting electricity sales to national economic growth; commodity prices; structural changes to the economy (e.g., reduction of mining and manufacturing and growth in services); technological changes; electricity intensity levels; and population growth.
Williams described the increase as “exorbitant”. He said it would have a detrimental effect on residents and the metro’s financial sustainability.
“Despite the National Treasury guidelines proposing an electricity tariff increase of 8,5%, Eskom has instead made a submission to Nersa requesting a series of double-digit increases over the next three years,” Williams said.
“The power utility has requested a 20.5% increase for the 2022/23 financial year, followed by a 15.07% increase next year and a 10% increase the year after.” According to Eskom, the tariff increases for the two years after the 2022 application were still the subject of a court review application.
“Should the three proposed price increases go ahead, electricity purchased from Eskom in three years will be almost 50% more expensive than it currently is,” Williams said. “This will have a dramatic and negative effect on residents, businesses and the city.” He said while Eskom was facing financial difficulties, this should not be shifted to consumers.
“The unfortunate reality is that even with these proposed excessive price hikes, Eskom services are not guaranteed as residents and businesses continue to experience regular electricity outages.” Williams said excessive price hikes would encourage those who have the means to explore off-grid solutions, resulting in revenue losses for the already financially struggling metro and Eskom.
“It will also lead to a possible escalation in illegal connections as the cost of electricity would become unsustainable for residents with lower incomes who cannot afford to go off the grid. Both of these combined scenarios will lead to a massive loss of revenue.”
Tshwane’s electricity tariff increase for the 2021/22 financial year was 14.59%. Tshwane’s rejection of the tariff hike proposal followed after DA Shadow Minister of Mineral Resources and Energy Kevin Mileham slammed Eskom for the hikes, saying that they would be unaffordable for many residents.
“Eskom’s inability to provide a regular supply of electricity to consumers makes the entity’s demand not only outrageous but also out of touch with the rising cost of living for the average South African consumer.”