The focus in President Jacob Zuma’s State of the Nation address on moderating the rate of increase in South Africa’s electricity tariffs has received strong support from business groupings.

Zuma said that he had asked Eskom “to seek options on how the price increase requirement may be reduced over the next few years, in support of economic growth and job creation and give me proposals for consideration”.

Speaking to e-TV following Zuma’s speech in Parliament, Public Enterprises Minister Malusi Gigaba said the report would be presented to the President within four weeks.

Business Unity South Africa (Busa) said rapidly rising electricity costs were an ongoing concern that affected small and big business, as well as communities.

“We are pleased that in his address the President requested Eskom to come up with new options to stabilise electricity costs and we recommend that this be done in conjunction with the private sector,” Busa said.

Similarly, Manufacturing Circle executive director Coenraad Bezuidenhout argued that there was a need to bring down the cost of electricity in support of economic growth and job creation.

“Urgent action that extends beyond behaviour-changing incentives to actual absorption of electricity costs will save and even create jobs. The Manufacturing Circle will therefore be open to any pacts with government, labour and communities that need to be investigated to support such action,” Bezuidenhout said.

The South African Chamber of Commerce and Industry also welcomed the attention given to mitigating future electricity tariff increases, as well as to seeking ways of alleviating pressure on business.

Beside the request to Eskom, it is understood that officials from the departments of Public Enterprises and Energy were also preparing a new electricity pricing policy (EPP), which would seek to balance the sustainability of Eskom with the growth and development needs of the economy.

Zuma underlined this work in his address, when he said the country needed an “electricity price path which will ensure that Eskom and the industry remain financially viable and sustainable, but which remains affordable especially for the poor”.

Earlier, the National Energy Regulator of South Africa (Nersa) decided to postpone public hearings, scheduled for February 3, into its multiyear price determination methodology after receiving a letter from Energy Minister Dipuo Peters stating that government intended revising the EPP.

The current policy was premised on a transition towards the long-run marginal cost within five years of its adoption. This informed the rate-of-return methodology, based on the replacement cost of the assets, that was used by Nersa to set yearly tariffs on a three-year rotation.

Eskom CEO Brian Dames stressed that the utility had not yet finalised its tariff application for the period 2013 to 2016, which would have to be submitted in the coming months.

The utility had indicated previously that it might seek an additional two years of increases in the 25% range, having already been granted three such yearly increases for the period starting April 1, 2010 and ending on March 31, 2013. But Dames acknowledged that circumstances had changed, with many in industry cautioning that domestic power prices were approaching an affordability tipping point, which could have dire consequences for mining, beneficiaion and manufacturing.

“The country and the world, from an economic perspective, is in a very difficult position – we understand that clearly. We understand the need for us to balance that and for us to be conscious of how do you create a viable Eskom and how do you create [conditions for] the introduction of new power generators into the market,” Dames said recently.

“Over the next few months”, Eskom would also seek “full alignment” between stakeholders on the approach that should be adopted to create sustainability and predictability, while offering confidence to investors, as well as those local and international bondholders currently funding Eskom’s expansion programmes.