NEWS & ANALYSIS

Eskom tariff hikes: AG must annually audit all NERSA pricing – Kevin Mileham

DA MP says it is unfortunate that these tariff hikes come at a time of economic meltdown

Eskom tariff hikes: DA reiterates call for A-G to annually audit all NERSA pricing and regulatory account determinations

29 July 2020

The Democratic Alliance (DA) has noted the High Court ruling in favour of Eskom against the National Energy Regulator of South Africa (NERSA), allowing the power utility to hike electricity tariffs by more than 10%.

While the DA respects the Court’s decision, it is unfortunate that these tariff hikes come at a time when our country is in a middle of an economic meltdown that has been further exacerbated by the Covid-19 pandemic which has affected the livelihoods of thousands of households across South Africa.

This tariff hike is Eskom’s bid to recoup the loss that resulted through an error made by NERSA in calculating tariffs for the power utility, an error which has cost Eskom billions in revenue. NERSA’s ongoing “mistakes” will cost the South African public dearly as South Africans can barely afford electricity prices as it is.

The DA reiterates our call on the Auditor-General of South Africa to audit all NERSA’s pricing and regulatory account determinations on an annual basis, in order to prevent another “mistake” at the expense of South Africa’s long-suffering consumers.

Now, South Africans will not only have to pay more in tariffs because the years of corruption and mismanagement at the power utility has increased the cost of doing business for Eskom – South Africans will now also have to bear the brunt of NERSA’s costly miscalculations and its legal battles.

The economy is in free fall due to the extended Covid-19 lockdown and years of state abuse. Unemployment numbers are soaring, and businesses of all sizes are closing their doors permanently. The DA is concerned about the impact another electricity tariff hike would have on the millions of poor South Africans, who are already feeling the pinch of an ailing economy.

These events strengthen our call for Independent Electricity Management Operator, as proposed by the DA's private member's IEMO Bill. This would level the playing field by creating an independent grid operator, which would be at liberty to purchase from all generation sources (including Eskom and independent power producers) at market related rates. NERSA needs to immediately put in place checks and balances to ensure that the tariff calculation process is transparent, fair and able to be reviewed during the process, to avoid having their determinations taken on review through the courts years later.

Issued by Kevin Mileham, DA Shadow Minister of Mineral Resources and Energy, 29 July 2020