South Africa’s big energy users want review of Eskom tariff hike

South Africa’s biggest energy users criticised a R54 billion ($3 billion) settlement between the state power utility and regulator and called for a review of the process to determine electricity prices.

The agreement reached between Eskom and the National Energy Regulator of South Africa last week over a tariff award — found to be based on incorrect data — will drive up electricity prices, adding to an eight-fold surge in power costs since 2008, according to the Energy Intensive Users Group.

Read: Nersa confirms R54bn secret settlement with Eskom

“The lack of transparency of the settlement leaves much to be desired,” the EIUG, whose members, including Anglo American Plc and Glencore Plc, account for about 40% of the nation’s electricity consumption, said in a statement. “This is especially so when it comes to the implementation period of this settlement, which was also not consulted upon and yet directly affects consumers.”

The price increase is being “phased in to balance the sustainability of Eskom,” the utility said last week in a response to questions about the settlement.

Read: Eskom’s pricing proves we need competitive markets now

The EIUG also urged Nersa to revisit its January tariff decision and consider its pricing methodology and implementation “as it has not succeeded by and large in bringing price stability and predictability.”

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