South African electricity customers may face higher tariffs as major ferrochrome producers reduce their consumption of Eskom-supplied electricity, prompting a request to amend their negotiated pricing agreements.
At a recent subcommittee meeting of the National Energy Regulator of South Africa (NERSA), ferrochrome producers Glencore and Samancor requested tariff adjustments linked to declining output. Under existing negotiated pricing agreements, they are required to consume 80 GWh per smelter or maintain a minimum load factor of 70%. Lower consumption triggers higher per-unit costs.
The companies have asked NERSA to recalculate tariffs on a smelter-by-smelter basis, citing an influx of cheaper ferrochrome imports from China and worsening market conditions. If approved, the change will reduce Eskom’s industrial sales volumes, placing more pressure on other customers to absorb fixed costs through higher tariffs.
“They can no longer afford to meet that consumption and can’t afford to pay for the consumption they don’t use,” said Charles Geldard, Regulatory Specialist at NERSA. “If the companies are not given approval for the adjustment, they will not be able to remain in production.”
NERSA is expected to make a final decision on or before July 21 this year.
