1. Eskom presentation – Select Committee on Communications and Public Enterprises 14 June 2017
Briefing by Eskom on its tariff increase for and amended pricing structure for municipalities with effect from 1 July 2017

2. Eskom tariffs – a regulated environment
Regulatory environment in which tariffs are determined
Legislation (Acts)
The Electricity Regulation Act, 2006 (Act no 40 of 2006 as amended) or ERA
Nersa must regulate electricity prices and tariffs. Eskom may only charge a tariff determined by Nersa
Municipal Finance Management Act (MFMA); and
For Municipal tariff increases Eskom to timeously table proposed increases in Parliament in terms of MFMA
Promotion of Administrative Justice Act (PAJA)
Judicial review of an administrative action
Government Electricity Pricing Policy (EPP)
The Codes – Grid Code (Transmission) and Distribution Code
Nersa rules and guidelines

3. Municipal Finance Management Act (MFMA) determines the annual tariff adjustment Eskom and NERSA time-lines
MFMA creates two set of tariff rates for Eskom i.e. Eskom directly supplied and municipal tariff rates
Non-municipal
Higher tariffs over 12 months
Municipal
Higher tariffs over 9 months
1 April
non-municipal increase
1 July
municipal increase
Period available to recover the MYPD allowed annual revenues

4. The Nersa approved 2017/18 tariff increase tabled
Total Standard Tariffs
2.20%
Municipal – 1 July 2017
0.31%
Key Industrial & Urban
Other Tariff Charges
Rural
2.2%
Homelight 20A
Block 1 (0-350kWh)
Block 2 (>350kWh)
Homelight 60A
Homepower
On 23 February 2017, Nersa made a decision to maintain the allowed revenue of R198 954 million for standard tariff customers, as determined in the MYPD 3 decision and subsequently revised.
The Nersa decision on the average price increase to be applied to Eskom’s standard tariffs for 2017/18 is 2.2%.
In compliance to the MFMA, the municipal tariff increase is calculated to be effective on 1 July of the application year.
To achieve the required annual municipal increase and revenues, a 0.31% 1 July 2017 municipal tariff increase is required.
Confidential

5. Implications of Nersa revenue decision
Revenue decisions …….
The implications ……
NERSA’s revenue decisions for the 5 year period (MYPD3) has come to an end on 31 March 2018
All consumers have experienced a decrease in the real cost of energy for the 2017/18 year as the expected annual inflation rate is 5-6%
Eskom own operations has receive only approximately a 1.1% increase for approximately 45,000MW of capacity
IPP costs increases with 1% of the 2.2% for approximately 4,500MW of capacity

6. Conclusion: The 2017/18 tariffs were tabled in compliance with the MFMA
The tariff was approved by Nersa and tabled in Parliament before implementation per MFMA requirements
Eskom will continue to collaborate with stakeholders across South Africa – engaging in discussions on the future tariff frameworks.
The municipal business is a key component to Eskom’s revenues and is therefore proactively working together with them to address key issues around the tariff, as well as outstanding debt.
Affordability of electricity for the poor at a time of increasing prices is of great importance to Eskom