Retail Tariff - Distribution

Nersa has not approved the Eskom Retail Tariff proposals contained in the plan noted below. The Nersa reasons for decision can be found here: https://www.nersa.org.za/electricity-overview/electricity-pricing/

Eskom last revised its tariff structures in 2012 and is proposing structural changes to the Eskom tariffs, based on an updated cost-of-supply (or cost-to-serve/CTS) study. Some tariffs will see increases and others will reduce, but the overall Eskom revenue will be the same.

There are various reasons why Eskom is proposing changes to its tariffs:

The different tariff rates no longer reflect the different services being provided (that is, the tariffs are not aligned with energy, network and retail costs) due to the application of average price increases.
The unbundling of Eskom into Eskom Holdings, Distribution, Transmission and Generation requires that the charges are more reflective of the costs per division.
The energy industry is evolving, and tariff structures also need to evolve to protect all customer interests and to ensure adequate recovery of National Energy Regulator of South Africa (NERSA) approved revenue by Eskom.
The consequences of applying average increases to rates is that there is currently no link between the charges raised and the NERSA-approved cost per division. The overall sum of all charges recovered by Eskom is based on the approved MYPD revenue decision. Tariffs therefore need to be updated to accurately reflect current Eskom divisional costs to avoid volume and trading.

The consequences of applying average increases to rates is that there is currently no link between the charges raised and the NERSA-approved cost per division. The overall sum of all charges recovered by Eskom is based on the approved MYPD revenue decision. Tariffs therefore need to be updated to accurately reflect current Eskom divisional costs to avoid volume and trading risk, to reflect cost drivers more accurately, to avoid unintended and unwarranted cross-subsidies, and to ensure that tariff charges cater for the unbundling of Eskom.

Nersa has published the consultation paper on the proposed Retail Tariff plan on its website. Click here to access the document.

The Retail tariff plan is based on the 2021/ 2022 Cost to serve study.

Click here for the Cost to serve study.