On Wednesday, Eskom reported it had generated R4.6 billion in revenue this year. Two days after, the National Energy Regulator (Nersa) accepted the utility’s application to extend the amount of time it has to submit another electricity tariff hike application.
This comes after Nersa approved a tariff increase of 9.6% in March that came into effect in April. In a statement yesterday, Nersa said it had “approved Eskom’s application for an extension to submit the new Multi-Year Price Determination (MYPD) application until 1 April 2017.”
Earlier this year, Nersa approved the MYPD3 Regulatory Clearing Account (RCA) application Eskom submitted for the 2013/14 financial year.
‘With a bottom line profit of R4.6 billion, Eskom’s revenue increased by 10.6% to R163.4 billion’
Business is Booming
With a bottom line profit of R4.6 billion, Eskom’s revenue increased by 10.6% to R163.4 billion. It’s EBITDA (earnings before interest, tax, depreciation and amortisation) rose by 37.4% to R32 billion from R23.3 billion in 2015.
Brain Molefe, the CEO of Eskom said its cost savings came to R17.5 billion. This figure is well above its R13.4 billion target, surpassing last year’s R9 billion. Moreover, Eskom obtained 57% of funding for 2016/2017.
“Financial performance improved against the previous year, and all financial ratios showed improvement due to improved operating results, as well as the conversion to equity of the subordinated government loan and equity injection of R23 billion,”
“Operating results also improved due to stringent cost containment measures,” said Molefe.
‘The MYPD methodology has been extended to allow further consultations with stakeholders.’
A New Tariff Hike Application
Within three months, Eskom will submit a revised MYPD application that takes the current circumstances into account, as requested by Nersa.
Previously, Nersa approved a R11, 241 billion RCA balance, although Eskom applied for R22.8 billion. The main reason for this decision had to do with the allocation of the approved MPYPD3 profits to customer categories. Eskom had failed to separate the international sales and special pricing agreements.
“Eskom cited statutory consultation requirements and the revision of the MYPD methodology as reasons for the request,” said Nersa of the new application.”
‘Consumer finances will be hit hard by another electricity tariff hike’
“The Energy Regulator also decided that Eskom’s RCA applications for the second and third years of the MYPD3 (2014/15 and 2015/16) should be submitted together.
The two RCA applications will be processed simultaneously once they have been received. In view of the above, the process of reviewing the MYPD methodology has been extended to allow further consultations with stakeholders.”
Explanations aside, consumer finances will certainly be hit hard by another tariff hike. Particularly, considering the heavy economic strain South African households are already under.