On Thursday 12 January 2023, the Energy Regulator of South Africa (NERSA) announced its decision regarding the increase Eskom can apply electricity tariffs in South Africa for the next two years.

Based on the information at its disposal and the analysis of Eskom’s fifth Multi-Year Price Determination (MYPD5) revenue application for the 2023/24 and 2024/5 financial years, the Energy Regulator, at its meeting held on 12 January 2023, decided to allow Eskom to increase its tariffs by 18,65% on 1 April 2023, and by 12,74% on 1 April 2024.

Customers who buy electricity directly from Eskom will pay the higher tariff from 1 April and those whose electricity is supplied by municipal distributors will pay more from 1 July.

Although the regulator is still to publish an official statement outlining the reasons for its decision, it was clear from comments made during the two-hour long discussion the regulatory committee held that a number of issues needed to be addressed by Eskom.

The discussion centred around three main concerns:

• The excessive use of diesel-powered open cycle gas turbines (OCGTs)
• The declining performance of Eskom’s coal-fired power plants as expressed as the energy availability factor (EAF)
• Coal supply and maintenance issues

OCGT usage

Eskom was criticised for what the regulator said was excessive use of its OCGTs. They supported their argument that the OCGTs were being over-used by the fact that Eskom spent twice the budgeted amount on diesel in 2022, requiring the utility to seek financial aid to buy more diesel in November (roughly three-quarters through its financial year). The OCGTs were installed, the regulator said, to provide the country with additional power during the morning and evening peaks, and for emergencies.

It was mentioned that Eskom was too quick to resort to its OCGTs when faced with failing traditional generators. Eskom apparently claimed that it had resorted to using its OCGTs when generation failed to meet demand due to factors “outside of management’s control”. The regulator expressed concern saying that nothing should be outside of management’s control, and certainly not as frequently as it seemed to be.

Eskom had requested permission to increase the use of its OCGTs from 6% load factor to 12%. The regulator said that while it could not prevent Eskom from increasing the usage of its OCGTs, it was unwilling to compensate the power utility for the usage beyond 6% load factor.

Power station performance

The ever-decreasing EAF is worrying, the regulator said. Load shedding will not decrease unless the EAF improves and increasing the tariff won’t improve the EAF, the regulator added. The power utility must focus on improving the EAF to levels above 65%.

Maintenance and coal quality

The regulator was critical of Eskom’s increase in the amount of coal that was burned while electricity generation was decreasing. The issue of poor-quality coal resulting from criminal acts must be addressed by management, the regulator said, and not be passed on to the consumer through tariff increases.

Regarding maintenance, the regulator said that Eskom must do everything necessary to improve the EAF of its coal-fired power stations to decrease the need for load shedding. The regulator said that it was unfair to expect consumers to pay for equipment “No new plant will be available this year – [Eskom] must fix what they have”, the regulator NERSA said.