How the electricity tariff hike will affect City of Joburg consumers
Eskom securing a tariff hike from the National Energy Regulator of South Africa (Nersa) may be good news for the utility’s balance sheet, but what seems like just a few cents may prove unsustainable – especially for municipal customers.
Nersa agreed to an 18.65% increase in electricity tariffs, effective from 1 April.
The ailing utility had requested a 38.1% increase for 2023/2024, and a further 22.52% for the following year.
For 2024/2023 Eskom has been granted a 12.74% increase.
On average, a unit of electricity directly bought from Eskom currently costs 148 cents per kilowatt hour (kwh). From April, that will go up to 173.8 cents/kwh.
CITY POWER SURCHARGE
If you buy from Johannesburg-based City Power, a unit costs 239.66 cents/kwh – 60% more than Eskom’s price.
Eskom’s general manager for regulations, Hasha Tlhotlhalemaje, said this pricing is regulated.
“Once Nersa makes its initial decision, municipalities will come back to ask for their price increases – because obviously they add value in the sense that they have to maintain infrastructure, and they have to pay their staff. So there will be some changes to what they will charge,” Tlhotlhalemaje explained.
“The interesting thing about municipalities is that they do charge a third charge that is not related to the actual cost of the electricity. This is just something that they charge to be able to cover their overall costs.”
SHAKING ESKOM RELIANCE
The utility has not announced how the recent tariff hike will affect its prices, but the City of Johannesburg says it is actively working to reduce its dependence on Eskom.
As it stands, the city procures over 90% of its energy from Eskom. But that may not be the case for much longer.
Mayor Mpho Phalatse said they would begin the public consultations processes next month to find alternative electricity suppliers.
“The tariff hike is unaffordable under the circumstances, and will increase City Power’s bulk purchases costs to about R200 million a month, which, unfortunately, we will be forced to pass through to the consumer, already reeling from high inflation, job losses, and recovering from the impact of COVID-19.”
-EWN
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