Electricity Pricing Policy and Impact of Multi-Year Price Determination: briefing by Department of Energy and National Energy Regulator of South Africa (NERSA)

PMG 1 August 2012.

Date of Meeting:

1 Aug 2012

Chairperson:

Mr KA Moloto (ANC)

Summary:

The Department of Energy spoke on the background, the electricity pricing policy mandate, the electricity pricing policy principles, funding the Integrated Resource Plan, protecting the poor and the challenges and status of the Multi-Year Price Determination. The Department explained that addressing affordability was a major issue during periods of high price increase. The measures which had been introduced to protect the poor included facilitating access to electricity through government subsidized electrification, free basic electricity to the indigent, free connections provided to Eskom’s low consumption residential customers, and lower price increases applied to low consumption domestic customers via the inclining block tariff which was being implemented by municipalities..

After providing details on the rationale and concept of the Multi-Year Price Determination, the National Energy Regulator of South Africa explained what had happened to price increases for MYPD 1 and 2. MYPD3 was still with National Treasury and the South African Local Government Association and finalisation of the application would be made known in February 2013. Consultation with the public would begin at the end of August 2012. The current Electricity Pricing Policy stands for price increases that promote economic growth. There is going to be public consultation on both the application and changes in the rules.

Members asked if there was a pricing policy for MYPD3 and what was the possibility of an inflation related pricing policy? What was going to be the effect of the re-evaluation of the assets of Eskom? How NERSA made its forecasts? Were they based on assumptions or calculations of GDP numbers? Was the re-opening of the MYPD done at the request of Eskom or was it the initiative of NERSA?

http://www.pmg.org.za/report/20120801-briefing-department-energy-concept-and-rationale-multi-year-price-det

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