MPs grill NERSA on electricity tariff hikes

Electricity and Energy Minister Kgosientsho Ramokgopa has acknowledged that the high price of electricity is hitting hard on both low-income and middle-class households.

Ramokgopa and the National Energy Regulator of South Africa (NERSA) appeared before Parliament regarding electricity price hikes. MPs wanted to know how NERSA arrived at the decision to increase electricity prices.

The MPs said they’re concerned about the high price of electricity in the country and the massive tariffs that are approved by NERSA. They want government to intervene and minimize the devastating impact that the hikes are having on households and the economy.

“Let’s look at an average increase of 15%, that’s more than double the inflation rate, in fact, it’s more than three times the inflation rate in South Africa, so it’s having a massive inflation pressure on the cost of living,” says DA MP Kevin Mileham.

“The tariffs that are up now [Iam] just worried that businesses will face increased operational cost which might lead to higher prices for consumers and that will have job cuts and businesses close,” says ANC MP Vusumuzi Nkosi.

However, NERSA says its process to determine municipal traffic considers the socio-economic conditions of the country.

In addition, NERSA says it also considers millions who receive free electricity.

“The reason we also introduced the inclining block format was exactly to caution the poor then and yes, as we go forward, we will continue to revise the methodology to take into account whatever socioeconomic effects are there, but inclining block tariff was exactly for that but maybe it’s implementation and time has passed and we have to look at something different,” says Thembani Bukula, NERSA Chairperson.

Government says it is aware of the challenges faced by people due to the electricity price increase.

“We want to make sure that electricity pricing structure is such that it’s affordable for low-income households and cost effective for everyone so that businesses are competitive and even the middle class there, I mean they are also under significant amount of burden so I’m not about to suggest that it’s only the poor feeling the pain,” says Ramokgopa.

NERSA also says it is appealing the ruling by the North Gauteng High Court on the application brought by AfriForum on municipalities that were authorized to implement the tariff increases.

The court ruled that such tariff hikes without the required cost-of-supply studies are unlawful and invalid.

Video: NERSA in Parliament – MPs grill energy regulator on tariff hike