Energy Minister Dipuo Peters yesterday said SA might delay electricity tariff increases, a move that has been welcomed by the Energy Intensive Users Group of Southern Africa, which represents Eskom’s largest industrial customers.
In a written reply to a parliamentary question, Ms Peters said the proposed changes in the pricing methodology, used to determine Eskom’s electricity tariffs, could take effect in the next round of multiyear price determination in 2013.
The changes in the pricing method could have adverse financial consequences for Eskom and are likely to affect the utility’s credit rating and attractiveness in the bond market, both key factors in Eskom’s efforts to raise finance. Higher tariffs are the main reason behind Eskom’s improved financial performance.
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Ms Peters alluded to possible changes in the electricity pricing policy. She pointed to shortcomings in the current methodology, especially the valuation of Eskom’s assets in the determination of the utility’s tariffs. "What we are considering is an approach that delays the tariff increase," she said.
"This is being considered in the next tariff determination for the period starting in 2013."
However, a member of the National Energy Regulation of South Africa (Nersa) responsible for electricity, Thembani Bukula, said the regulator was not aware of the proposed changes in the electricity pricing policy. "But if there are changes in the policy, we will implement them," Mr Bukula said.
Eskom spokeswoman Hilary Joffe yesterday said the utility was preparing its submission for the next multiyear pricing determination.
"It is important to us that we meet the timelines - set out by - Nersa. The current multiyear price determination expires at the end of March 2013 and a new determination would be needed to cover the period from April 2013," she said.
A rethink in the pricing methodology will be closely watched by business and industry associations, which have bemoaned the negative effect of high electricity tariffs.
Business Unity SA deputy CEO Raymond Parsons yesterday said the body was concerned about the "bunching up" and cumulative effect of steep rises in administrative prices like electricity. Mr Raymond said there was a need for a more co-ordinated approach to the problem of excessive electricity costs.
The intensive energy users group said yesterday: "It is heartening that the minister has appreciated the risks that rapidly rising electricity prices (pose for) economic growth and job creation."