QUOTE
By James Macharia
South Africa's power regulator approved a 14.2-percent tariff increase for state-owned utility Eskom's 2008/09 financial year, turning down the power firm's request for a 18.7 percent raise.
The National Energy Regulator (NERSA) granted the increase after weighing Eskom's plans for expanding power supply and the likely impact of any increase on inflation and affordability for consumers, the authority said on Thursday. The regulator took note of concerns on the possible impact of the Eskom price increase on the economy, especially on the poor, but took the view that the long-run benefits to the economy far outweighed the short-term fears, it added.
"This means some trade-off is necessary between industry sustainability and consideration over other economic and social objectives," NERSA said in a statement.
'The bulk of the increase is for primary energy cost'
Eskom, which generates the vast majority of South Africa's power but has struggled to meet demand in Africa's biggest economy, was allowed to raise the tariffs from April next year to end-March 2009.
The utility had also applied for a 17 percent increase for 2009, but the regulator said a new power deal to cover the three years from April 2009 would be agreed by September 2008.
The request for a tariff raise, which also drew fire from trade unions, was significantly above the central bank's 3 to 6 percent inflation target range, invoking warnings from the bank that such raises would fuel inflation.
The central bank said last month the expected sharp increases in electricity prices were likely to put further pressure on inflation, even though the bank had already factored "higher than traditional" increases into its inflation forecasts.
Eskom's Financial Director, Bongani Nqwababa, said Eskom, which mainly relies on coal-fired power generation, would give a detailed response on the tariff adjustment in January.
"The bulk of the increase is for primary energy cost, that is fuel cost, largely coal. Coal prices have gone up quite significantly," Nqwababa told Reuters.
From the tariff increase, Eskom would reap an additional R1.27-billion to expand power generating facilities, and R2.4-billion to meet increased costs of coal, NERSA said.
Eskom's expansion costs may double to R300-billion over five years, the utility has previously said.
South Africa's electricity prices are among the cheapest in the world, and Eskom, which is the world's lowest-cost electricity producer, plans massive upgrades of old infrastructure and building of new plants.
Major cities, including industrial and financial hub Johannesburg, suffer regular and costly power cuts.
South Africa's powerful trade union federation Cosatu had threatened to call a strike if Eskom was allowed to raise electricity tariffs by 18.7 percent.
South Africa's power regulator approved a 14.2-percent tariff increase for state-owned utility Eskom's 2008/09 financial year, turning down the power firm's request for a 18.7 percent raise.
The National Energy Regulator (NERSA) granted the increase after weighing Eskom's plans for expanding power supply and the likely impact of any increase on inflation and affordability for consumers, the authority said on Thursday. The regulator took note of concerns on the possible impact of the Eskom price increase on the economy, especially on the poor, but took the view that the long-run benefits to the economy far outweighed the short-term fears, it added.
"This means some trade-off is necessary between industry sustainability and consideration over other economic and social objectives," NERSA said in a statement.
'The bulk of the increase is for primary energy cost'
Eskom, which generates the vast majority of South Africa's power but has struggled to meet demand in Africa's biggest economy, was allowed to raise the tariffs from April next year to end-March 2009.
The utility had also applied for a 17 percent increase for 2009, but the regulator said a new power deal to cover the three years from April 2009 would be agreed by September 2008.
The request for a tariff raise, which also drew fire from trade unions, was significantly above the central bank's 3 to 6 percent inflation target range, invoking warnings from the bank that such raises would fuel inflation.
The central bank said last month the expected sharp increases in electricity prices were likely to put further pressure on inflation, even though the bank had already factored "higher than traditional" increases into its inflation forecasts.
Eskom's Financial Director, Bongani Nqwababa, said Eskom, which mainly relies on coal-fired power generation, would give a detailed response on the tariff adjustment in January.
"The bulk of the increase is for primary energy cost, that is fuel cost, largely coal. Coal prices have gone up quite significantly," Nqwababa told Reuters.
From the tariff increase, Eskom would reap an additional R1.27-billion to expand power generating facilities, and R2.4-billion to meet increased costs of coal, NERSA said.
Eskom's expansion costs may double to R300-billion over five years, the utility has previously said.
South Africa's electricity prices are among the cheapest in the world, and Eskom, which is the world's lowest-cost electricity producer, plans massive upgrades of old infrastructure and building of new plants.
Major cities, including industrial and financial hub Johannesburg, suffer regular and costly power cuts.
South Africa's powerful trade union federation Cosatu had threatened to call a strike if Eskom was allowed to raise electricity tariffs by 18.7 percent.
So, does this mean that we can expect fewer blackouts (or load shedding as they put it)?
This is ridiculous though. A 14.2% increase just like that? AND then Eskom wants to have ANOTHER increase thereafter?
Fuck them... htey probably paid out EVERY SINGLE staff member with a performance bonus... and now they need to increase the price to be able to afford that 
at you 
you stupid feking government/Eskom/kak!