The Energy Intensive User Group (EIUG) has expressed concern that power utility Eskom’s decision to approach the courts to have the National Energy Regulator of South Africa’s (Nersa’s) tariff determination for 2018/19 set aside will increase uncertainty regarding electricity prices.
This will negatively impact on large power users, the organisation states.
In statement released on Friday, EIUG CEO Xolani Mbanga noted that the organisation acknowledges that the operating environment has changed significantly and has potentially rendered Nersa’s regulatory framework outdated; however, “we need South African industries to remain internationally competitive . . . this cannot happen if large electricity price increases are awarded to Eskom.”
Mbanga added that major price increases will reduce demand, suppress Eskom’s sales and exacerbate the utility’s financial situation.
Nersa applies regulations as laid out by the Department of Energy (DoE), which are now being challenged by this Eskom application.
The EIUG hopes the DoE will use this opportunity to review its approach, said Mbanga.
“The way forward towards a sustainable electricity sector, is to plan for and agree the details of a ‘just transition’, and not to increase the price of electricity to levels where price increases and demand destruction feed on each other in a disruptive downward spiral. We will be following the situation closely,” he added.
The EIUG represents very large energy intensive consumers in South Africa whose members collectively consume about 40% of South Africa’s electricity. The organisation works towards a sustainable energy sector on behalf of its members.