South Africa power utility, ESKOM has revealed plans to increase tariffs, a development that will see the power utility getting an additional R69 billion in revenue.
The review of tariffs is however dependent upon the High Court accepting Eskom’s arguments about the need for a much narrower application of the tariff methodology.
Tariffs are set to increase by only 8.1% in April and 5.22% a year later but if Eskom’s application is successful, power tariff increases for this year and next year will have to be set at 16% to make up the shortfall.
Meanwhile, South Africa’s National Energy Regulator (Nersa) said it tested the reasonableness of Eskom’s allowable return on assets as well as the tariffs and found that Eskom’s return was too high and that the tariffs would be unaffordable if the adjustment was not made.
However, Chaskalson emphasised that this methodology was subject to the Electricity Regulation Act which determines that Nersa must enable an effective licence holder (Eskom) to recover the full costs of its licence activities and a reasonable profit margin or return from tariffs.
Eskom has been struggling to contain load-shedding which resulted in its chairperson Jabu Mabuza resigning from his post.
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