It is becoming increasingly important for the retail and property sectors to liaise with the National Energy Regulator of South Africa (Nersa) about electricity tariffs set by municipalities, rather than focus on State-owned power utility Eskom’s proposed tariff increases, then Eskom spokesperson Hilary Joffe says.

Engaging with retail industry stakeholders at an event last month, hosted by the South African Council of Shopping Centres (SACSC), in Johannesburg, Joffe, who has since returned to the daily, Business Day, acknowledged the sector’s concern about municipal tariff increases and its impact on the sector.

Most of the retailers agreed that the tariffs imposed on them by their respective municipalities were crippling the sector. They called on Eskom to work with Nersa to assist them in challenging the municipalities to ease the blow of tariff increases on retail.

Acknowledging the industry’s points as valid, Joffe, nevertheless, reminded those present that, with regard to tariff structuring, local government had been awarded certain Constitu- tional powers, which Eskom did not have.

Therefore, while the State power utility could assist municipalities in designing their tariff structure, when required to do so, it was not in a position to interfere in the municipali- ties’ decision-making processes.

Eskom corporate electricity pricing specialist Shirley Salvoldi also mentioned that there were several complaints about municipal tariffs at this year’s Nersa public hearings, adding that the regulator was well aware of the issue.

Joffe further reminded stakeholders that municipalities relied heavily on electricity revenue to fund their activities, but conceded that South Africa’s municipal funding model was an issue that government and stakeholders needed to review.

She told Engineering News, however, that reviewing the issue of municipal tariffs was not directly related to Eskom and should, therefore, be managed appropriately. “While several policy issues emerged through our tariff application process, some of these issues need to be managed by the country and not just by Eskom,” she said.

Meanwhile, Joffe added that the regulator seemed to have acknowledged industry’s concerns about the affordability of electricity prices in its decision to grant Eskom an 8%-a-year increase, as opposed to the requested 16%-a-year increase.

She told Engineering News that Nersa’s decision had had a significant impact on Eskom, adding that the utility was under- going intensive retrospection to determine exactly how the decision would impact on Eskom’s decisions going forward.

“It will mean a reshaping of our business. Still, for our customers, an increase of 8% a year is certainly better than 16%,” she said.