What is the story about?
What's Happening?
The Energy Intensive Users Group (EIUG), representing South Africa's largest industrial and mining companies, is urging a reopening of the recent electricity tariff determination. This follows a R54-billion settlement between the National Energy Regulator of South Africa (Nersa) and Eskom, which has introduced uncertainty in future electricity pricing. The settlement acknowledges errors in tariff calculations for the 2025/26 to 2027/28 financial years, leading to higher-than-expected tariff hikes. The EIUG, whose members consume about 40% of the country's electricity, argues that the lack of transparency and the potential for further increases due to regulatory clearing account (RCA) allowances necessitate a review of the tariff decision.
Why It's Important?
The call for a tariff reopener is significant as it highlights the challenges faced by South Africa's industrial and mining sectors, which are heavily reliant on stable and predictable electricity costs. The potential for increased tariffs could lead to higher production costs, impacting the competitiveness of these industries. This situation could result in job losses and reduced investment in the sector, affecting the broader South African economy. The EIUG's concerns also underscore the need for transparent regulatory processes to ensure fair pricing and maintain industry confidence.
What's Next?
The EIUG is advocating for a review of the electricity pricing policy and the MYPD pricing methodology to achieve price stability. The group is prepared to contribute to the public consultation process announced by the Electricity and Energy Minister. Meanwhile, Eskom is expected to continue its efforts to improve operational efficiency to mitigate cost increases. The outcome of these discussions and potential policy changes will be closely watched by industry stakeholders.
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