ESKOM is at least 15 years away from instituting inflation-cost tariff increases, as the power utility says it needs 16% increases for the next five years, followed by a similar period of 20% increases with a final five years of 9% increases.
Eskom chief financial officer Paul O’Flaherty said this during Tuesday’s presentation to Parliament’s portfolio committee on energy.
Mr O’Flaherty said these increases were based on the assumption that Eskom generated 65% of the country’s electricity needs and independent power producers (IPPs) the remainder using mainly renewable energy sources.
Earlier this month Eskom applied to the National energy Regulator of South Africa (Nersa) for an average increase of 16% over the next five years.
Should the regulator approve this, it would mean electricity prices will more than double from the current 61c a kilowatt-hour to 128c/kWh. The new tariffs come into effect next year and cover the period between April next year and March 2018.
Eskom’s application says the 16% increase consists of a 13% increase for costs, and another 3% increase to account for the introduction of IPPs.
Mr O’Flaherty told MPs: "What we (Eskom) want to guarantee are steady increases instead of price shocks. It is our belief that we need to put a line in the sand, get cost-reflective tariffs and then contain costs. You can’t, in our view, keep pushing out these issues," he said.
Nersa is now presenting to the energy committee.
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