Get your budget ready for another Eskom price hike

by , 12 July 2016
Get your budget ready for another Eskom price hike
If you're celebrating that we're almost through winter and had no load-shedding, I have some bad news for you.

You and I might have had an “uninterrupted” power supply this winter but it's going to cost our pockets, big time!

According to an article in the City Press newspaper this weekend, “The economy is set for a shock from the combined blows of Eskom's move to hike the cost of two of its biggest new power stations by almost R83 billion and the utility's rising multibillion-rand debt.”

Guess who's going to fit the bill?

Prepare yourself for more power price hikes from Eskom

 
Eskom’s annual report shows that scheduled delays and a lack of time for proper planning increased the costs of the Medupi and Kusile power plants. “The board approved revised business cases, thereby increasing the available amount to R145 billion for Medupi and R161.4 billion for Kusile [previously R105 billion and R118.5 billion, respectively].”
 
The cost of the power stations increased from R223.5 billion to a total of R306.4 billion. This is going to have a direct impact on the price you pay for electricity going forward. Over the past few year, we’ve already been charged for Eskom’s poor performance. The graph below illustrates how drastically the cost of electricity has increased in South Africa since 1970. As you can see, price hikes started to rocket just before 2010. 
























Graph source: www.businesstech.co.za

Brace yourself – Nersa has already approved Eskom next tariff hike application

 
Nersa has already approved Eskom’s application for an extension to submit a new tariff increase application. This comes at a pivotal time because Nersa already approved a 9.4% electricity tariff hike which came into effect in April this year.
 
Given the poor management of the power stations and the rest of the electricity infrastructure, consumers like you and I can expect the National Energy Regulator, (NERSA) to approve more price increases from Eskom. This will push consumer inflation through the roof, increase interest rates and put a damper on the country’s economic growth environment.
 
The financial strain is only going to get worse as 2016 continues.
 
So it’s time for you to take a serious look at your expenses and find ways to increase your income, grow your investments and manage your budget more tightly.
 





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