Electricity tariff increase approved by Nersa is a clear rebuke of Eskom, but still too high
24 February 2022
I have noted that Nersa has decided not to award Eskom an increase of 20,5% and has instead allowed Eskom a 9,61% increase in the price of electricity. This increase will become effective from 1 April 2022 (Electricity tariff increases for City customers will be determined through the Budget process and increases will come into effect from 1 July 2022).
This increase is less than half of what Eskom asked for, and is a clear rebuke to Eskom’s totally unrealistic request. While I am happy that Nersa took the voice of thousands of Capetonians into consideration, it must be noted that the increase of 9,1% is still 4,1 percentage points higher than inflation.
Our message to Nersa was simple: Capetonians simply cannot afford above-inflation increases in the cost of electricity. Such increases are unfair, unaffordable and unjust. This remains our view.
Despite a 544% increase in the average price of electricity from 2007 to 2021, South Africans have seen a continued increase in load-shedding and energy insecurity.
The City of Cape Town has been proud to be able to shield its customers from some of these harms, both financially (through absorbing some of the cost of Eskom’s increases) and through mitigating load-shedding via the Steenbras pumped storage scheme.
The City is working towards bringing down the cost of electricity over time through its IPP procurement project, which is under way. This project aims to allow the City to purchase electricity from IPPs at a rate far below Eskom’s, and pass this saving on to its customers. The project also aims to end load-shedding in Cape Town over time.
It must be acknowledged that years of corruption, poor planning, and mismanagement at Eskom and within the national government have created the current situation where Eskom seems to have little option but to ask for massive increases. However, it is simply unacceptable that Eskom simply gets to pass on the costs of misconduct and corruption onto ordinary South African households.
I have personally acknowledged Eskom CEO Mr André De Ruyter’s ongoing effort to stabilise the utility’s finances and have applauded his efforts in this regard. I have also acknowledged that Eskom needs to take further urgent steps to reduce its debt and improve its financial sustainability. The latest announcement by Nersa will not be welcomed by Eskom. However, passing the bill on to struggling consumers should not be the default solution, and Nersa should be lauded for taking a strong stance in this regard.
I remain committed to doing what I can to make Cape Town energy secure, as well as ensuring that access to reliable electricity is affordable for all.
Issued by Media Office, City of Cape Town, 24 February 2022
