Link power hikes to inflation, Nersa told

Business Report 2 August 2012.

The National Assembly energy portfolio committee yesterday pressed the National Energy Regulator of SA (Nersa) to ensure that inflation-linked increases should apply in future for electricity produced by Eskom.

The committee, chaired by ANC MP Arthur Moloto, hosted Nersa’s electricity regulator Thembani Bukulu during discussions on the medium-term tariff application which Eskom must lodge within two weeks with the regulator. It is understood that Eskom will be seeking an increase of between 14.5 percent to nearly 20 percent over the next five years…

(Editor’s note: In the end the taxpayer will pay for the electricity infrastructure expansion – either through electricity tariff increases or through tax revenue being diverted to Eskom. I would argue that it is better to charge cost-reflective tariffs for electricity and if it is thought necessary to give industry a helping hand because their increased electricity bills, then this should be done through other means than subsidised electricity. In this way we will all strive for energy efficiency which will help every part of the economy. However, with elections coming up, NERSA and Eskom will probably not be allowed to go for cost-reflective tariffs.)