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Electricity tariff increase

What the above-inflation electricity tariff increase granted by NERSA means for the mining industry, Eskom and Eskom’s other customers

On 7 March 2019, the National Energy Regulator of South Africa (NERSA) granted annual electricity tariff increases of 9.4% in 2019/2020; 8.1% in 2020/2021; and 5.2% in 2021/2022 in terms of the Multi-Year Price Determination Period four (MYPD4), for the period 1 April 2019 to 31 March 2022. NERSA further approved an additional 4.4% tariff increase in terms of Eskom’s Third Multi-Year Price Determination Regulatory Clearing Account (RCA) for year five which will, in effect, increases the annual electricity tariff for 2019/2020 to 13.9%. The increases amount to a compounded increase of 9.0% over three years, which is 29.5% higher than the current electricity tariff

While the tariff increases granted by NERSA are less than the amounts Eskom applied for, the substantial tariff increases that have been awarded will have a major impact on the industry’s cost structure, jeopardising the viability of marginal and loss-making mines and, inevitably, accelerating job losses at energy-intensive mines in particular.