Eskom to come to terms with tariff increase, says CFO Calib Cassim

Nersa has granted a tariff increase of 9.61 percent instead of the 20.5 percent Eskom requested.

The National Energy Regulator of South Africa (Nersa) has announced it has granted Eskom an average standard tariff increase of 9.61 percent instead of the 20.5 percent the power utility had requested in its 2022/2023 revenue application.

While Eskom said it appreciated that Nersa made the revenue determination in time for it to implement the increases, CFO Calib Cassim said the power utility had to come to terms with the financial implications of the decision on its long-term sustainability. “It is understood that Nersa considered the impact on consumers and the financial sustainability of Eskom as it made its decision.”

Eskom added that its board would deliberate further before deciding how it can continue to sustainably provide electricity to the extent possible in the context of the revenue decision.

Eskom initially made a Multi-Year Price Determination (MYPD) revenue application to Nersa on 2 June 2021 for the 2022/2023, 2023/2024, and 2024/2025 financial years, per the prevailing Nersa methodology. But on 30 September 2021, the energy regulator rejected the application.

Eskom was then required to make a new application based on a methodology that was not yet published and which the utility contended would not be ready before price increases were due.

The utility successfully reviewed this decision in the High Court, which ruled that Nersa had to make an allowable revenue determination for the 2022/2023 financial year.

The regulator had determined Eskom should be allowed revenue of R249.726 billion, R26.531 billion less than the R276.257 billion the utility had requested.