A general view of the headquarter of the embattled South African main electricity provider ESKOM is pictured on February 4, 2015 in Johannesburg. South Africa power supply was under “extreme” pressure on February 2, 2015 and likely to remain so until end of the week after a technical fault at the country’s sole nuclear plant, electricity utility Eskom said. AFP PHOTO/GIANLUIGI GUERCIA (Photo by GIANLUIGI GUERCIA / AFP)
A general view of the headquarter of the embattled South African main electricity provider ESKOM is pictured on February 4, 2015 in Johannesburg. South Africa power supply was under “extreme” pressure on February 2, 2015 and likely to remain so until end of the week after a technical fault at the country’s sole nuclear plant, electricity utility Eskom said. AFP PHOTO/GIANLUIGI GUERCIA (Photo by GIANLUIGI GUERCIA / AFP)
Imagine you made a mistake at work that affected the entire country. Your indiscretion wasn’t a one-off, and it cost the economy billions. Now imagine facing your customers and saying “you’ll have to pay me more for this service”. It is Eskom’s world, and we are all just living in it.
Jan Oberholzer is the COO of the ailing state-owned business. He confirmed on Monday that Eskom will be in court next week, to fight a decision handed down by the National Energy Regulator of South Africa (Nersa). The power utility wants to raise their electricity tarrifs by more than double the suggested rate:
“We haven’t handed out a performance bonus in two years. If you look at our financial statements, the item that is being spoken about is misleading. The money has been set aside for 13th-cheques, which are part of the employment contract. Our application for a tariff increase doesn’t relate to our inefficiencies.”
“We cannot take public money for that, and certainly not R1.8 billion. We’re reviewing all supply contracts as we speak. The same goes for procurement. We do want to raise tariffs by 16%, and yes, it will pose a significant challenge to the economy. I agree.”
Jan Oberholzer
Energy expert Ted Blom helped us break things down with a little more clarity:
“Eskom is arguing that Nersa short-changed it by at least R100 billion and is asking the court to order the claw back of at least R69 billion. If this first application succeeds, it could result in tariffs increasing by 16% in 2020, instead of the 8.1% as things currently stand.”
So, one way or another, our bills will be going up again this year. But what does a 16% tariff increase actually mean for us, the customers? For starters, with every R1 you spend on electricity from April 2020 onwards, there would be an additional 16 cents to pay – and this is the difference it will make for Eskom:
Revenue and tarrifs | Tariffs for 2020 (at Nersa’s 8.1% rate) | Tariffs for 2020 (at Eskom’s proposed 16% rate) |
Total expected revenue from all customers | R221.8 billion | R237.3 billion |
Revenues from tariff-based sales | R205.1 billion | R219.3 billion |
Standard average tariff | 110.93 cents / R1.10 (per kilowatt-hour) | 119.03 cents / R1.19 (per kilowatt hour) |
It also boils down to your kilowatt-hour price going up – this is the measurement which determines how much electricity each household and electrical appliance uses. We’ve got a nifty explainer on that here. Under Eskom’s plans, we’d be paying an additional nine-cents-per kWh when compared to Nersa’s tariff.