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NERSA should consider price increase "seriously"

by Luyanda Makapela
on 30 May 2008
BuaNews Online
BuaNews Online

Eskom has appealed to the National Energy Regulator of South Africa (NERSA) to seriously consider its application for a 53 percent increase in electricity tariffs, which was needed to help the state utility overcome the electricity shortage.

"We urge the national regulator to seriously consider this matter as we have run out of reserve margins while the security supply is being threatened. This is something which will impact on our customers," said Eskom Chief Executive Officer Jacob Maroga on Thursday.

Speaking at the public hearings at NERSA headquarters in Pretoria, Mr Maroga said the power utility had been running its plants at over their capacity limit.

"We are in a deep power emergency, which is serious and it will take a few years in order for us to deal with this issue.

"I appeal to the regulator to look at the negative impact that this will have on our country in the long run should this issue not be addressed now," he said.

He added that Eskom required robust and flexible regulatory mechanisms.

Mr Maroga further said Eskom will have to undertake massive borrowing in South Africa and abroad due to the nature of current energy crisis.

As diesel was the main cost driver of coal, the problem was not about coal but the underlying costs behind it, such as transportation of the energy source.

"As much as it is our intention to keep costs down, these dynamics make it difficult for us to work efficiently," said Mr Maroga.

He added that prices needed to reflect the cost of providing services to customers.

NERSA is expected to announce its decision on electricity and tariff increases to Eskom on 18 June.

On Tuesday, Business Unity South Africa (BUSA) called on NERSA to consider a smooth transition into the proposed higher tariffs to ensure it does not impact negatively on the country's economy and the poor.

BUSA committee member Professor Raymond Parsons said all relevant stakeholders wanted to have predictability and certainty regarding resolving the energy crisis.

"We should consider both demand and supply while ensuring that prices reflect electricity cost of supply," said BUSA's Chairman of Standing Committee on Economic Policy, Roger Baxter who was filing submissions before NERSA.

He said he hoped all inputs made before NERSA in the decision making process would be of great benefit.

"We hope that NERSA would reinstall confidence and credibility in finding solutions on this matter," Mr Baxter said before the five-member NERSA panel.

"NERSA needs to help all those that are affected to smooth the process of escalating rates of electricity," said Human Science Research Council Executive Director, Miriam Atmant.

She also said her organisation wanted NERSA to consider economic growth and the impact the proposed price will have on poor households. - BuaNews

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