Municipal Electricity Hike

Municipal Users face a 60% higher increase than those faced by Eskom Users

Today,3 June 2010, the National Energy Regulator of South Africa (Nersa) will host a public hearing into applications by those municipalities applying for tariff increases above the recommended guideline. These increases could be implemented from July 1 and the stakes for municipal consumers are high. NUS Consulting South Africa, an energy cost management consulting firm, which operates in 13 countries and serves over 10 000 clients, has warned that many South African municipal clients could end up paying substantially higher tariffs than Eskom clients.

Municipal users face an increase of 13,5c/ kWh, or more, which translates to a 60% higher increase in rand terms than those faced by Eskom's customers. GM Stephan Dolk has warned that, unless municipal increases are kept to below 20%, the disparity between an Eskom client and a municipal client could grow substantially.

"If municipalities increase their tariffs at the same rate as Eskom over the next five years, an Eskom client will be paying R1,34/kWh, while a municipal client will pay R2,06/kWh. On the other side of the playing field, Cooperative Governance and Traditional Affairs Minister Sicelo Shiceka, argues that Nersa is exceeding its mandate by ordering municipalities to cap electricity charges. Nersa maintains that its mandate and authority is premised on the Electricity Regulation Act of 2006, and has pointed in particular to section 4a (ii), which stipulates: "The Regulator must regulate prices and tariffs". 

According to Dolk the increasing brazenness of some municipalities towards Nersa's authority is of concern.

To read the full article by Terence Creamer, click here

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