The National Energy Regulator of South Africa (Nersa) has published retail tariff adjustments for 2023/24 that include a 10% increase for poor residential customers, instead of the 18.65% approved for the standard tariff. This lower hike to poor customers will be paid for through a 29.53% increase in the so-called affordability subsidy paid by large electricity consumers, which will result in their tariffs being hiked by 19.09% on April 1.
The adjustments flow from the regulator’s recent approval of Eskom’s Retail Tariff and Structural Adjustment (ERTSA) application, which was submitted following Nersa’s January 12 approval of an average tariff increase of 18.65% for Eskom’s standard tariff customers.
The ERTSA application, which was made on February 28, outlined how Eskom would recover the approved revenue for the 2023/24 year from each customer category. On 2 March 2023, however, Eskom submitted a revised version with a lower increase of 10% for Homelight 20Amp customers.
On March 10, the Energy Regulator decided on the ERTSA and approved an average tariff increase of 18.65% for Eskom’s standard tariff customers and an increase of 18.49% for municipalities.
In its statement confirming the approval, Nersa said “industrial and urban customers will realise an 18.65% increase plus an additional 7.37c/kWh to cater for the subsidy, which increases from 5.69c/kWh resulting in a 29.53% increase”.
Customers affected by the 19.09% hike include large urban industrial customers falling under the following tariff structures: Megaflex, Miniflex, Nightsave Urban, the wholesale electricity pricing system, or WEPS, and Megaflex Gen.
Homelight 20Amp customers, who are mainly low-income households, will experience a lower increase of 10%, Nersa confirmed.
Municipalities will also realise a lower increase of 18.49% because “in the first three months (April to June) of Eskom’s financial year, they will not experience an increase, as their financial year commences on 1 July every year”.
The July 1 municipal increases are aligned with the requirements of the Municipal Finance Management Act, while the increase for Eskom’s standard tariff customers would be effective from April 1.
“Eskom will over-recover revenues in the first three months (April to June) of its financial year, hence municipalities will only experience an increase of 18.49% as opposed to the 18.65% that the rest of Eskom’s customers will see,” Nersa said in a statement.
The regulator also noted that the approved tariffs exclude value-added tax.
As reported by Engineering News previously, the regulator’s decision was tabled in Parliament on March 13, opening the way for the legal implementation of the tariff increases.
The implementation of the tariff hike on April 1 is also not expected to be affected by legal challenges to the hikes, after applications for an urgent interdict against the implementation of the increases.
In cases brought by the Tebelia Institute and the Democratic Alliance, the interdict formed the first part of a two-part review application. The review, or Part B, of that application is now scheduled to be heard during May. Part B challenges the Nersa determination made on January 12 for Eskom’s allowable revenue.
A separate case by the United Democratic Movement (UDM) and others addresses the loadshedding aspects. The urgent aspect of the UDM-led case is proceeding from March 20, 2023 in the Gauteng High Court.
Opposition to the increases remains strong, however, with Cape Town Mayor Geordin Hill-Lewis describing confirmation of the 18.49% price hike to municipalities as "unfair, unaffordable, and unjust for residents struggling with the rising cost of living".
"The public is being forced to pay for corruption and mismanagement at Eskom in the most unfair, unaffordable and unjust way.
"That is why in Cape Town we are working to end our Eskom reliance and diversify energy supply to more affordable power sources," Hill-Lewis said.