Energy Minister Dipuo Peters on Thursday implored South Africa's municipalities to heed the energy regulator's guidelines on how the tariff increases granted to Eskom should be passed on to residential consumers.

In the past, municipal distributors have passed on the full burden, despite their tariffs already being materially higher than the wholesale tariff, and despite that fact that the electricity component of their tariff accounted for only around 67%.

The National Energy Regulator of South Africa (Nersa) has approved a nominal Eskom power tariff increase of 24,8% as from April 1, 2010, and subsequent increases of 25,8% and 25,9% for 2011/12 and 2012/13 respectively.

Speaking at a Cabinet media briefing, Peters said that the guidelines effectively "capped" municipal tariff increase to around 15% in 2010/11, which would help dampen the effect on residential consumers, if implemented.

She also welcomed the National Energy Regulator's announcement on the "residential inclining block rate tariff structure", which provided a framework for the cross-subsidisation of low-income domestic consumers.

A day earlier, Nersa said that those municipal distributors that implemented the 34% increase in the 2009/10 financial year, a municipal guideline increase of 15,33% had been approved for implementation with effect from July 1, followed by 16,03% from July 1, 2011, and another 16,16 % from July 1, 2012. For those municipal distributors that implemented a different increase, Nersa would consider applications on a case-by-case basis.

A deadline of April 30, 2010, had been set for the submission of municipal tariff applications.

Meanwhile, the new block-tariff mechanism would translate (owing mainly to implementation issues) into a 10,59% reduction in the tariff, to 54,7c/kWh, for households consuming less than 50 kWhs monthly, and a reduction of 5,2%, to 58,48c/kWh, for those consuming between 51 kWhs and 350 kWhs monthly.

The tariff would increase by 5,4% and 5,5% in the 2011/12 and 2012/13 years respectively (rising eventually to 60,83c/kWh) for those in the sub-50-kWh band, and by 13,23% and 13,5% respectively for those consuming between 51 kWhs and 350 kWhs, with the price rising to 75,09c/kWh by the end of the MYPD2 period.

By contrast, households consuming between 351 kWhs and 600 kWhs monthly will face immediate increases of 21,95%, raising the price to 72,35c/kWh in 2010/11, with subsequent yearly increases of 25,8% and 25,9% planned, which would raise the price to 120c/kWh in 2012/13.

Those households consuming more than 601 kWhs monthly would face relatively punitive tariff increases of 35,82% to 83,74c/kWh in 2010/11, followed by increases of 25,8% and 25,9% in 2011/12 and 2012/13, which would raise the price to 132c/kWh by the end of the MYPD2 period.