Imagine you made a mistake at work that affected the entire country. Your indiscretion wasn’t a one-off, and it cost the economy billions. Now imagine facing your customers and saying “you’ll have to pay me more for this service”. It is Eskom’s world, and we are all just living in it.
Eskom tariff hikes – how much will they increase by?
Jan Oberholzer is the COO of the ailing state-owned business. He confirmed during the past week that Eskom will fight a decision handed down by the National Energy Regulator of South Africa (Nersa). The power utility wants to raise their electricity tariffs by more than double the suggested rate:
“We haven’t handed out a performance bonus in two years. If you look at our financial statements, the item that is being spoken about is misleading. The money has been set aside for 13th-cheques, which are part of the employment contract. Our application for a tariff increase doesn’t relate to our inefficiencies.”
“We cannot take public money for that, and certainly not R1.8 billion. We’re reviewing all supply contracts as we speak. The same goes for procurement. We do want to raise tariffs by 16%, and yes, it will pose a significant challenge to the economy. I agree.”
Eskom tariffs for 2020
- Eskom secured a 9.41% tariff increase for the 2019/20 financial year. That came off the back of a 4.5% increase in 2018, meaning that consumers saw bills shoot up by almost 14% in 2019.
- Nersa granted Eskom permission to put their tariffs up by a further 8% in 2020. However, this did not sit well with the energy firm. They want the regulatory body to grant them a whopping 16% hike for this financial year.
- Eskom also wants prices to go up even further in 2021. In total, they were looking to secure a 45% increase over three years. Nersa instead decided to grant them just 22.3%, sparking the utility’s decision to take legal action.
Energy expert Ted Blom helped us break things down with a little more clarity:
“Eskom is arguing that Nersa short-changed it by at least R100 billion and is asking the court to order the claw back of at least R69 billion. If this first application succeeds, it could result in tariffs increasing by 16% in 2020, instead of the 8.1% as things currently stand.”
What we pay for electricity in South Africa
So, one way or another, our bills will be going up again this year. But what does a 16% tariff increase actually mean for us, the customers? For starters, with every R1 you spend on electricity from April 2020 onwards, there would be an additional 16 cents to pay – and this is the difference it will make for Eskom:
| Revenue and tariffs | Tariffs for 2020 (at Nersa’s 8.1% rate) | Tariffs for 2020 (at Eskom’s proposed 16% rate) |
| Total expected revenue from all customers | R221.8 billion | R237.3 billion |
| Revenues from tariff-based sales | R205.1 billion | R219.3 billion |
| Standard average tariff | 110.93 cents / R1.10 (per kilowatt-hour) | 119.03 cents / R1.19 (per kilowatt hour) |
It also boils down to your kilowatt-hour price going up – this is the measurement that determines how much electricity each household and electrical appliance uses. We’ve got a nifty explainer on that here. Under Eskom’s plans, we’d be paying an additional nine-cents-per kWh when compared to Nersa’s tariff.
(All numbers sourced directly from Eskom)
