Lower Eskom tariffs is a significant outcome

Although still painful for business and consumers the Nersa decision to allow a much lower 12.7% rise in Eskom tariffs, instead of the 36% previously sought by Eskom, is a significant outcome. Nersa has recognised the critical inputs it received last year from extensive public hearings on Eskom’s original massive application and its potential socioeconomic impact.

The usual cost-plus approach to Eskom finances has therefore now been considerably ameliorated. But even at a 12.7% Eskom tariff hike, allowance must also be made for the additional municipal surcharges that usually follow such tariff rises. Hence the electricity costs of doing business will inevitably rise later this year.

Higher power tariffs will nonetheless also encourage the search for alternative energy options and further lessen dependence on Eskom. Hence the Nersa decision does not resolve the much bigger challenge of how Eskom is to be properly financed in the longer term - and how soon its present restructuring will facilitate more viable outcomes for the troubled state-owned enterprise.

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