Eskom should do the right thing

Business Day Live 5 March 2013.

THE decision by the National Energy Regulator of SA (Nersa) to limit power utility Eskom to an 8% average increase a year for the next five years comes as an enormous relief. This is especially true for business, which is under strain from many other things that are making doing business extremely tough. The political pressure to keep the increases down has also been apparent.

Yet within the relief there is room for a few questions to be asked. First, how is it possible for Eskom to ask for a 16% increase every year for five years, and for Nersa to halve this number? Either Nersa’s calculations are horribly wrong, or Eskom’s claim that it is trying its best to keep electricity prices as low as possible is bunkum. The second question is tricky: has Nersa overreacted to political pressure to keep electricity prices low? Is it asking too much of Eskom?

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