The National Energy Regulator of South Africa (Nersa) is holding public hearings on Eskom’s revenue-clearing account which could see electricity tariffs raised by as much as 16.6%.

The revenue-clearing account is a way for Eskom to recuperate unanticipated expenditure created while generating electricity.

These costs are usually passed along to the consumer the following year but only if Nersa declares the costs were prudently incurred and Eskom passes efficiency tests.

Eskom is seeking a whopping R11 billion in lost revenue due to lower than anticipated sales. Executive Director of electricity at City of Cape Town, Dr. Les Rencontre, pointed out that raising tariffs because South Africans used less electricity would effectively punish them for saving electricity in the first place.

The rest of the R22.8 billion Eskom wants to recuperate is made up of R8 billion spent on diesel-powered turbines and R2 billion from higher coal prices. Should Eskom be granted the tariff increase – 8.6% on top of the 8% that is already on the cards, South Africans could see a hike as high as 16.6%  this year.

While many South African’s question the impact a tariff hike of 16.6% would have on their lives as well as the economy, Eskom Chief Financial Officer, Anoj Singh has said all factors have been considered by the utility.

“We did look long and hard at the implications on the economy, but we were also of the view that as Eskom, we have various stakeholders to take into account, not only the interests of consumers”, Singh told the Nersa panel in Cape Town on Monday.

“We have a fiduciary duty to our shareholder, which is government, and we must demonstrate to investors that we can use the revenue-clearing account to improve the sustainability of the organisation.”

Stakeholders, City of Cape Town and the South African Local Government Association both argued against the full 8.6% increase that Eskom is asking for.

Business Day Live reports that Nersa member for electricity, Thembani Bukula said some additional cost recovery may be granted but this should not be the full 8.6%

[Via – Business Day Live] [Image CC by 2.0 – Santi]