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SALGA clarifies confusion surrounding the proposed “15.23% Eskom tariff increase”

 

 

 


Posted: 17 May 2019

SALGA would like to clarify that, contrary to what is in the public domain surrounding the proposed “15.23% Eskom tariff increase”, the municipal tariff for the 2019/20 financial year, is yet to be approved. The 15.23% tariff increase, as referred to in the public domain, is a proposed National Energy Regulator of South Africa (NERSA) Municipal Guideline and not an Eskom increase. The confusion and consequent panic both for the public and municipalities respectively is premature and regrettable.

NERSA, on an annual basis, approves a percentage guideline increase and reviews the municipal tariff benchmarks. As a matter of fact, NERSA is still in the process of making a decision on the proposed guideline.  Municipalities are yet to submit applications to NERSA for a proposed tariff to be charged to their customers. The guideline increase assists municipalities in the preparation of their budgets for the ensuing financial year, while the revised benchmarks are used in the evaluation of the municipal tariff applications.  It also assists municipalities on how they would pass through the Eskom increase considering the different financial years between Eskom and municipalities. 

The reason for the higher pass-through tariff in the municipalities' guideline is because of misalignment of financial years for implementation of tariffs between Eskom and Municipalities.  On 7 March 2019, NERSA made a determination on Eskom’s fourth Multi-Year Price Determination (MYPD4). NERSA subsequently, approved Eskom’s Retail Tariff Structural Adjustments (ERTSA) on 13 March 2019 to be at 13.07%. From April to June 2019, Eskom as per its financial year commencement, will start collecting on its 13.07% increase, and the municipalities continue collecting on the previous year's tariffs until the beginning of their financial year, which is the 1st of July 2019, where they will now be implementing the increase to claw back the under-recovery for the months of April, May and June 2019.

SALGA would like to assure all municipalities that consultation has taken place between SALGA and NERSA on the development of the Municipal Guideline for 2019/20, which is yet to be approved by NERSA. The outcome will be communicated with all the municipalities as it unfolds.
 
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