South Africans will continue to pay more for electricity as a result of Eskom's financial woes and the global economic recession, National Energy Regulator of SA chair Collin Matjila said on Thursday.

Announcing a 31.1 percent hike in electricity tariffs, Matjila said the prediction that prices would nominally be increased by 20 and 25 percent over the next two years could not longer be relied on.

"We are not able to give you a scientifically researched projection now as we did last year. It is a reality that the price of electricity is going to increase.

"The world has changed since we took that decision last year. The economic outlook has changed for the worse," Matjila said in Pretoria.

The price hike will result in a rise in the average standard tariff from 25.24 cents per kilowatt hour to 33.14 cents. The increase will come into effect on 1 July.

The adjustment would result in an estimated standard tariff revenue of R62.031 billion from distribution standard tariff sales of 198 857 gigawatt hours.

The estimated total revenues, including special pricing agreements for bigger users of electricity, will be R64.704-billion for sales of 222 640 gigawatt hours, including international sales.

Matjila said the approved price increase on the average standard tariffs included a limited price increase of 15 percent to both Eskom and the various municipalities' poor customers.

In addition, he added that Nersa would conduct a "verification" of all costs and "costs determined not to have been efficiently incurred in line with the multi-year price determination rules". These costs would be "clawed back".

Eskom came under fire during the public hearings into their tariff increase application for the high costs of mainly coal and staff.

Matjila said Nersa may look into coal costs, but this would be "subject to confidentiality".

The energy regulator had taken into account the 175 written comments on the application, as well as a total of 21 oral presentations made earlier this month.

The parastatal's interim application unleashed a storm of criticism from trade unions and civil society groups due to the anticipated affect it would have on the poor.

Eskom was also widely criticised for missing the legislative deadline for its tariff hike application and for failing to provide sufficient information to substantiate the need for the increase.

"We hope this ad hoc application will not be a thing of the future," said Matjila, referring to the late application.

He also noted that the parastatal was required to cut costs. In addition, he said Eskom needed to submit its price increase applications to the regulator six months ahead of the date it would take effect from.

Addressing the lack of information provided by Eskom in its application, the regulator said it would issue minimum requirements to "provide clarity" on the information needed for tariff applications.

Eskom's chief executive Jacob Maroga during the public hearings said the country's electricity supply would be at risk if it did not receive the increase it required.

Normally it takes the regulator between three and six months from the completion of hearings to make its decision.

However, this year the announcement was made in under a month.

Senior executive members were however at pains to explain that they did not compromise on quality by fast-tracking the decision.

"The fact that we took a shorter period does not mean a sacrifice (on quality)," said Matjila.

Maroga has in the past reiterated that the parastatal's capital requirement increased 10-fold in the last five years from R11-billion to R104-billion in 2010.

This hike would be an interim move pending the finalisation of Eskom's funding model, likely to be thrashed out by the end of September this year.

Sapa

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