Call to raise power price to stimulate competition to Eskom

• 14 years ago (2009-11-19)
• David Flin

Africa 303

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Consultants Frost & Sullivan say that the South African government should raise electricity tariffs to a level that will allow Eskom and independent power producers to operate.

The extent to which Eskom’s electricity tariffs have to increase has been under much debate. The utility has argued for a rise of 45 per cent a year for three years, while large consumer groups and organisations argue that such a rise would be cataclysmic to the South African economy. The African National Congress has said that it is opposed to such a rise. A higher tariff could be a stimulant for IPPs as it will narrow the gap between Eskom’s tariffs and IPP’s tariffs.

Prospects for an annual 45 per cent rise are very slim, as that would go against the consensus for a “smoothed” tariff path, which was reached in 2008.

Goldstein said that the entry of IPPs would require tariff increases, “but not to the extent that Eskom has applied for in its MYPD2 tariff application.”