Chamber of Mines comment on Eskom’s application for an interim price increase

In its verbal submission to the National Electricity Regulator of South Africa (NERSA) on Eskom’s application for an interim price increase, the Chamber of Mines recommended that Eskom nand NERSA co-operate to ensure that the interim increase applied for is sufficient o adequately provide for the period until April 2010 and also that the two entities ensure that a funding model and consequent multi-year price determination (MYPD) for the period 2009/2010 to 2011/2012 are finalized in time for implementation by April 2010. In his submission, Mr Dick Kruger, the Chamber of Mines’ Assistant Adviser: Techno -Economics, said while the Chamber of Mines accept that there appears to be justification for the requested interim price increase, “the envisaged 34% increase applied for is not well motivated. The Chamber is concerned about the lack of detail on how the costs of: road maintenance; open cycle gas turbine; and non-Eskom generation will be recovered.. Should the interim increase granted fall short of the required increase, it could necessitate another interim price increase. Also, if the envisaged funding model and the consequent MYPD not be finalized in time, it will necessitate another interim price increase” Mr Kruger said NEDLAC social partners agreed during 2008 that prices would need to rise in order to ensure the sustainability and viability of the electricity supply industry, but that this should be over a period of 3-5 years to allow businesses and households to adjust as large front-loaded electricity price increase will have a disproportionately higher negative effect on the economy.

For any enquiries related to this media statement please contact:

Jabu Maphalala
Deputy Communications Adviser
Chamber of Mines of South Africa