Eskom wants more than it needs

Eskom's requested average tariff increase of 16% could be lowered to 10.8% and still be costs-reflective, Business Unity SA said yesterday.

According to research commissioned by Busa, an accelerative price path at a lower rate could be achieved without adversely affecting supply security.

"If more detailed information had been provided it might have been possible to find further savings.

"These electricity price shocks now have significant adverse economy-wide impacts," the business lobby group said.

The in-depth researchby Genesis Analysis will be released "at a later stage", said Busa.

It includes input from Busa members and formed the basis of its submission on the third multi-year price determination to the National Energy Regulator of SA last week.

The current multi-year price determination ends on March 31.

Busa sees the National Energy Regulator's consultative process as an "essential step" in arriving at optimal decisions about electricity tariffs.

Eskom is proposing a five-year determination for the third multi-year determination - from April 1 next year to March 31 2018 - to ensure what it calls a more gradual and predictable price path for households, businesses, investors and the country as a whole.

"Electricity prices need to transition to cost-reflective levels to support a sustainable electricity industry that has the resources to maintain operations and build generating capacity, guaranteeing security of supply.

"Failing to accommodate the country's energy needs would limit investment, which would result in fewer jobs and lower economic output," said Eskom.

"For historical reasons, electricity is currently charged at below cost-reflective levels, [which] is not sustainable," it said.

In October, Eskom asked the regulator to review two low-cost supply contracts with BHP Billiton.

Eskom has already eased up on its increase request of 25.9% after coming under pressure from the government, consumers, lobby groups and business to cut the costs of power. - BDlive