NERSA approves huge new tariff increase for Eskom for the next three years.

On 24 Feb 2010, NERSA approved Eskom’s MYPD2 (Multi-Year Price Determination 2) with increases in Eskom’s nominal tariffs of 24.8% for the 2010/2011 year, 25.8% for the 2011/2012 year and 25.9% for the 2012/2013 year.  The average electricity price will rise from a current R0.33/kwh to R0.415/kwh this year, then go up to R0.52/kwh in 2011/2012 and finally to R0.65/kwh in 2012/2013 thus doubling the average rate in the next 3 years.

NERSA also issued guidelines to prevent municipalities from passing on the full nominal amount of the increase as buying the electricity from Eskom only represents approximately 67% of the cost of providing electricity by the municipalities.  The three years of municipal increases were approved at 15.33% effective July 1, 20l10, 16.03% effective July 1, 2011 and 16.16% effective July 1, 2012.  The result of this will be to level out what end user customers pay for electricity as many current municipality tariffs are significantly higher than Eskom’s direct to the customer tariffs.

Finally, in a real blow to the domestic segment, NERSA announced the long awaited “residential inclining block tariff structure.”  In simple terms, the more you use the higher your tariff.  Very small household users, less than 50 kwh/mo, will see a 10.59% reduction in 2010 followed by increases of 5.4% and 5.5% in the succeeding 2 years.

The next level up, households using 51 – 250 kwh/mo will see a reduction of 5.2% in 2010 followed by increases of 13.23% and 13.5% in years 2 and 3.

Households using 351 – 600 kwh/mo will face a much larger increase of 21.95% in 2010 followed by increases of 25.8% and 25.9% in years 2 and 3.

Finally, larger households using 601 or more kwh/mo face a punitive tariff increase of 35.82% in 2010, followed by increases of 25.8% in 2011 and 25.9% in 2012 which ultimately brings this tariff to R1.32/kwh in 2013.  This is in stark contrast to the average domestic tariff of R0.7862/kwh in 2013.

These residential block tariffs will be carried over to the municipalities so all residential customers will be subject to these tariffs.

With rising energy costs and a volatile energy future in South Africa we all need to find ways of cutting down on electricity consumption which ultimately affects our finances. More businesses are finding that they can better meet their financial goals through energy conservation measures. In most businesses the energy required to operate lighting is a large percent of the energy bill. New and energy efficient technology is most certainly the route to go.

Even though it is said that South Africa still has the lowest electricity rates in the world this will not be the case as of 2010. Eskom has already indicated that they will tap into both domestic and capital markets at around an astonishing figure of R47 – billion a year between 2010 and 2013.

The Solution

Reduced consumption of electricity by the lighting system will create a massive savings on the overall electricity bill. Install the Electro Sense Proactive Energy Management System™ for the control of lighting and air-conditioning systems.

Electro Sense creates considerable savings of up to 85% of the total cost of electricity used in lighting and air-conditioning for its customers.