Page 8 - AfrElec Week 07 2021

AfrElec ESKOM AfrElec

Eskom keen to avoid

sudden bill increases

SOUTH AFRICA ESKOM will try to avoid sudden large increases there’s just not enough of a growth driver in the
in electricity tariffs, Eskom CEO André de economy.”
Ruyter said this week in the aftermath of the But, De Ruyter added, he believes Eskom and
national regulator rules that could recoup NERSA will be able to address the electricity
ZAR6bn ($410mn) in future tariffs. tariff issue “in a way that does not cause a price
De Ruyter made clear Eskom’s policy during a shock to the economy”.
podcast by the Free Market Foundation, Reuters Both entities want to avoid causing further
reported. distress to households and businesses, he said.
Sudden tariff hikes are a major issue in South Eskom is considering taking a phased approach
Africa just now, as at the start of February the to recovering these lost revenues, De Ruyter said.
National Energy Regulator of South Africa The main problem for Eskom is that it can-
(NERSA) ruled that it would allow Eskom not cover its costs, and that it has net debt of
to recover an additional ZAR6bn ($410mn) ZAR485bn ($33.2bn).
through tariffs. Meanwhile, President Cyril Ramaphosa said
This followed a high court judgment ordering in his State of the Nation Address last week that
the energy regulator to review its previous tariff Eskom had a crucial role to play in the country’s
decisions. economic recovery.
This ZAR6bn ($410mn) figure has come on “The load-shedding of the last few months
top of the original ZAR32.6bn ($2.2bn) that has had a debilitating effect on our country. It
NERSA allowed Eskom to recover from future has severely set back our efforts to rebuild the
tariffs. economy and to create jobs,” Ramaphosa said.
The cash is to compensate the company for “Every time it occurs, it disrupts people’s lives,
lost revenue during the three financial years from causing frustration, inconvenience, hardship.”
2014 to 2017 caused by low tariffs enforced by Ramaphosa added that Eskom’s woes were an
NERSA. inevitable consequence of its inability over many
The announcement has sparked concerns years – due to debt, lack of capacity and state cap-
that steep tariff increases will hurt businesses ture – to service its power plants.
already reeling from the coronavirus (COVID- Over the next few months, Ramaphosa said,
19) economic downturn and load-shedding. Eskom will implement measures to “fundamen-
De Ruyter said Eskom needs cost-reflective tally change the trajectory of energy generation
tariffs in order to recoup revenue. in our country”.
“Now, the quantum of electricity that we sell Reforms in the offing include: enabling the
has for a fairly long time now remained pretty development of additional grid capacity from
flat,” he said. renewable energy; opening up the grid to inde-
“And that is attributable to a lack of growth in pendent power producers (IPPs) and negotiat-
the economy. There’s a debate going on [about] ing supplementary power purchase agreements
whether or not this lack of growth is attributa- (PPAs) to acquire additional capacity from exist-
ble to a lack of reliable electricity, or whether ing wind and solar plants.™

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