SA’s biggest electricity users want more predictable tariffs

A group representing the biggest electricity consumers in South Africa, including Anglo American and Glencore, have appealed for more predictable power price increases.

The Energy Intensive Users Group, which accounts for about 40% of the nation’s power consumption, wants “stable and predictable tariff increases to promote medium- to long-term investment planning”, it said in a presentation to the regulator on Friday.

Public hearings took place last week over a proposal by state-owned utility Eskom to raise its fees by 21% for the 2022/2023 financial year.

South Africa over the last two decades has gone from having a surplus of cheap electricity to contending with an unreliable supply. Eskom’s coal-powered plants have been poorly maintained and prone to breakdowns, resulting in nationwide power cuts. The utility has said cost-reflective prices are needed to turn the loss-making business around.

Eskom and energy regulator Nersa, which sets the electricity prices, have sparred several times in court over its determinations. Some costs have jumped more than 30% since 2009, although they have rarely reached double digits in recent years.

The EIUG proposed that the consumer inflation rate plus two to four percentage points would be a reasonable annual tariff hike. It also asked the regulator to consider proposing incentives for Eskom to improve its power supply.  — (c) 2022 Bloomberg LP