Cape Town has urged Nersa to halt plans for additional Eskom tariff hikes, warning that consumers could face sharply higher electricity costs to correct a regulatory error — despite the power utility’s improved financial performance, the City says. The City of Cape Town has warned that electricity consumers could be forced to shoulder steep tariff hikes to correct a regulatory error, despite Eskom being in a stronger financial position than originally forecast. The City has called on the National Energy Regulator of South Africa (Nersa) to immediately halt plans that could allow Eskom to impose additional increases of up to 10.5% a year for the next two years — potentially more than double the initially approved 5% to 6%.
Nersa’s proposal follows a court ruling that found a calculation error in Eskom’s original tariff application, after asset depreciation was not properly accounted for in the regulator’s earlier decision. Mayor Geordin Hill-Lewis said the proposed correction was based on flawed figures and risked unfairly transferring the consequences of regulatory mistakes onto households and businesses. “We call on Nersa to immediately cancel plans to permit up to a 100% additional increase for Eskom over the next two years,” Hill-Lewis said in the City’s submission to the regulator.
“Nersa should instead complete a proper, error-free assessment of Eskom financials.” The Mayor said interim financial results show Eskom has generated substantial profits even under the lower tariffs already approved, raising serious questions about the need for further steep increases. “This is strong evidence that the public is being unfairly asked to absorb Eskom hikes of up to 10.5% annually, which could end up being more than double the initially approved increases,” he said. According to the City, Eskom’s improved financial performance can only reasonably be explained by higher-than-expected electricity sales, lower operational costs, or a combination of both — factors which, it argues, were not properly tested as part of Nersa’s redetermination process.
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The City’s submission states that beyond the acknowledged calculation error, Eskom’s tariff application contains several other inaccuracies, including outdated asset valuations that are critical in determining revenue needs without overcharging consumers. “Nersa’s redetermination process calls into question the credibility of Eskom’s tariff application, which by Nersa’s own admission contains data with underlying deficiencies,” said the City’s Mayco Member for Energy, Xanthea Limberg. Limberg said it was essential that all data submitted by Eskom be accurate and independently verified, given the cost-of-living implications for residents and businesses.
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