Südafrike : September 18, 2009

The forecast of an even higher price hike in electricity pricing, following the 27.4 percent Eskom increase in 2008 that left consumers shocked and infuriated, became a reality when NERSA (the National Energy Regulator of South Africa) approved a whopping 31.3 percent increase as of 1 July 2009.  Back in 2007, we predicted a 100 percent increase in electricity pricing over a period of 3 years, but expectations now are that increases will reach over 200 percent by 2012.

Eskom, South Africa’s primary power generator, asked for an increase of at least 34 percent for 2009 to accommodate the capital expenditures on critical power generation in the country.  Many view the expenditures to be a result of very poor planning and a growing demand for electricity.  Eskom had anticipated resistance to their request stating that they understood the pressures of the current economic situation on businesses even before the burden of the massive rise in power costs.

Naturally, funding for new power generation must come from somewhere and whether it is raised through increased government taxes or higher electricity rates, the result is the same – the consumer must pay.  It seems though that the nation is becoming accustomed to this trend of “higher-than-inflation” related hikes in power pricing as the resistance towards Eskom’s proposal was stronger in 2008 than to the 2009 increase.

NUS Consulting fully expects increases in electricity pricing to average 20 to 25 percent over the next three years.  This trend though ignores the effect on reseller pricing.  Municipalities also apply their own extra mark-ups on Eskom pricing and as is the case of the Gauteng-based municipality, a 50 percent increase from 1 July 2009 on larger consumers is not out of the question.