After approving an 18.65% price increase for Eskom in January, the national energy regulator Nersa has now authorised an 18.49% increase for municipalities.
The rise will take effect for Eskom’s regular tariff consumers on April 1, 2023, and for municipalities on July 1, 2023.
Nersa stated that essential industrial and urban customers will get an 18.65% rise and an extra 7.37c/kWh to account for the subsidy, up from 5.69c/kWh, for a 29.53% increase.
Municipalities will see a slightly lesser walk of 18.49% since there will be no rise in the first three months (April to June) of Eskom’s fiscal year – their fiscal year begins on July 1.
The table below shows the retail tariff adjustments for 2023-2024:
The regulator further stated that charges do not include value-added tax (VAT), since the rate is set by Minister of Finance Enoch Godognwana.
“The Minister of Finance last proclaimed a VAT increase in 2018, from 14% to 15%,” said Nersa.
Eskom will also make certain that its approved Schedule of Standard Prices for 2023/24 is published on its website and notified to all consumers.
Nersa’s proposed hike sparked outrage among South Africans who are already short for cash and have limited access to energy. So far this year, load shedding has been imposed every day. Since September 2022, South Africa has been in a near-permanent state of load shedding.
Municipalities, companies, and even President Cyril Ramaphosa have all criticised the walk as costly. The president even suggested that Eskom and Nersa postpone or stagger the hike to reduce the load on South Africans in general.
The Nersa approval, on the other hand, is definitive and can only be reversed through legal means. The president then retracted his remarks, acknowledging the regulator’s independence.
Eskom applauded the increase, despite the fact that it was well below the 32% target. The beleaguered power provider stated that prices must represent the cost of providing energy in order for the corporation to manage its financial challenges, cover its debt, and perform vital maintenance.
Nonetheless, one of the biggest challenges that persists is consumer nonpayment. Municipal consumers simply do not pay their bills, regardless matter how high Eskom raises rates, leaving the organisation with a municipal debt liability of more over R50 billion.
National Treasury has agreed to take on R254 billion of Eskom’s debt over three years to assist it manage its financial woes. R168 billion in capital and R86 billion in interest will be paid.
“Because of the structure of the debt relief, Eskom will not need further borrowing during the relief period. The government will finance the arrangement through the R66 billion baseline provision announced in the 2019 Budget and R118 billion in additional borrowings over the next three years,” Treasury said.
Consumers who are dissatisfied with the rate increases will use it as an additional incentive to leave Eskom’s grid. Treasury has also created a rooftop solar tax incentive to this goal.
Households that install rooftop solar panels between 1 March 2023 and 1 March 2024 can claim a 25% refund on the cost of the panels in the 2023/24 tax year, up to a maximum of R15,000.
