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Daily Maverick
5 days ago
- Business
- Daily Maverick
Nelson Mandela Bay faces electricity crisis: proposed 12.8% tariff hike sparks controversy
Citing spiralling non-technical electricity losses, the Nelson Mandela Bay Municipality's application for a 12.8% electricity tariff increase has revealed that the metro's electricity department will not generate any revenue or surpluses this year. However, there is some relief for old-age homes and residents of housing estates and residential complexes. 'The phenomenon of increasing electricity bulk purchases and spiralling decreases in electricity sales has reached unprecedented levels, to the point where the electricity service has become unable to generate its own revenue or any surpluses as per the historical model for this service,' the Nelson Mandela Bay municipality stated in its application to the National Energy Regulator of SA (Nersa) for an increase of 12.8% across the board for all categories of electricity users. The metro's non-revenue electricity losses for the financial year that ended in March 2025 stood at R1.049-billion, caused by factors including meter tampering and illegal connections. The draft budget for the metro, which was noted last week by the city council and was scheduled to be debated on Thursday, 5 June, also stated that the electricity department would have to be subsidised by municipal rates to remain viable. Opposition parties said the electricity department would bankrupt the city if a successful turnaround plan were not implemented. Earlier this year, the metro's executive mayor, Babalwa Lobishe, tried unsuccessfully to have R449.8-million relating to 30 tenders in the electricity department written off without the matter being investigated by the Municipal Public Accounts Committee. Nersa has, this year, decided to make all the municipal applications for electricity price increases public and has asked that the public send their comments. 'Nersa requires that all municipalities calculate their electricity tariffs based on the costs incurred in supplying customers,' said Nersa spokesperson Charles Hlabela. This is a legal requirement in line with a high court ruling obtained by the Nelson Mandela Bay Business Chamber. 'This requirement will be enforced to all municipalities for their 2025/26 electricity tariffs. Should the municipality fail to comply with this requirement, it will face a risk of having its tariffs not approved,' said Hlabela. He said Nersa valued input from all stakeholders and would consider written submissions alongside a thorough analysis of each application. Further issues were also touched on by the metro in its application. In its motivation for the electricity tariff increase, the municipality stated: 'The business of the Electricity and Energy Directorate is continuously plagued by a scourge in electricity theft, tampering and illegal connections as well as tariffs which were historically not cost reflective.' The metro, which derives R7.5-billion a year from electricity sales, said two main factors had led to the increase: Eskom bulk purchases had been increased by 12.74%; and Municipal salaries had been increased by 7.75% in line with the collective bargaining agreement. The metro said it was gearing up to implement an advanced metering infrastructure programme to reduce energy losses, improve revenue protection and enhance operational control. Some relief It offered some relief for residents of residential complexes and old-age homes, who had been incorrectly billed under the industrial and commercial bulk supply tariff, 'despite the actual end-user being classified as a residential customer in the NMBM Consolidated Billing System. 'This also comes as a direct result of numerous complaints received from this cohort of customers who deemed the current tariffs unfair, as they were being treated in the same way as businesses due to the tariff structure.' The application acknowledged that 'preventative maintenance and innovative switching methods can be game changers, ensuring that the system can handle fluctuating demand while reducing unexpected failures. 'A proactive approach could also lead to efficiencies in resource allocation as preventative maintenance often costs less than reactive repairs.' However, the application continued, 'It is unfortunately not possible to increase the Repairs & Maintenance Funding Allocation to the desired level.' The metro promised to do so within the next three years. It said there was no 'growing interest' from private generators or businesses looking to take advantage of wheeling arrangements. 'Illegal connections, tampering with metering equipment, infrastructure vandalism and access to properties are the dominant challenges faced in some of the electrification areas. Customer education, awareness interventions, audits and replacement of illegal connections with legal connections continue to receive special attention. 'The influx of people migrating to the metro and the associated need for accommodation result most of the time in the illegal construction of informal housing, contributing to the Electrification Programme complexity,' said the metro in its application. DM
The Citizen
28-05-2025
- Business
- The Citizen
30% electricity tariff increase is a reality, says Erasa
New tariff structure threatens resellers' business model. Resellers play an important role in the electricity value chain, especially in sectional title schemes – and households using less electricity are now being hit the hardest. Picture: Supplied The Electricity Resellers Association of South Africa (Erasa) will this week decide on a strategy to address members' concerns about a looming 30% increase in electricity tariffs for most of the end-users they serve in Eskom distribution areas, according to chair Johan Hopley. These are households that rent or own sectional title units and use on average 400kWh of electricity per month. They are generally already financially struggling, and such a sharp increase in electricity costs will drastically increase the risk of non-payment. A change in Eskom's tariff structure poses a further threat to the resellers' business model as it limits their ability to recover a loss on higher winter tariffs during the summer months, says Hopley. Electricity resellers play an important role in the electricity value chain, especially in sectional title schemes. In most cases, Eskom or the municipal distributor brings the electricity to one bulk connection point at the gate, so to speak, of the premises. The internal distribution is then done by the developer and managed in the long run with the assistance of a reseller. The reseller buys from Eskom or the municipality at a bulk rate but is legally not allowed to sell it to end users at more than the approved retail tariffs of the local electricity distributor, be it Eskom or the municipality. ALSO READ: Johannesburg's 2025/26 tariff increases — Here is how much more you could pay Impact already being felt According to Hopley, the first Eskom bills based on the new tariffs that were implemented on 1 April show an increase of 30% in buildings' bulk purchase cost. A building in the East of Pretoria, for example, paid R357 921 (excluding Vat) to Eskom in May last year. Based on the same number of units in May this year, the bill runs to R464 081 – a 30% increase. Resellers must pass this on to end users who are expecting an increase of no more than the 12.74% that energy regulator Nersa approved for Eskom from 1 April. That widely quoted number is, however, an average and does not reflect the much higher increases for those using less electricity every month. ALSO READ: Nersa approves 12.7% electricity tariff hike for Eskom A tenant or unit owner who used 400kWh in May last year and paid R1 177, will now have to pay R1 547 – an increase of 31%. This may be a huge shock to smaller households that are already struggling to make ends meet, says Hopley, and may result in lower payment rates – which poses a huge risk for resellers. If they use more electricity, the increase moderates. However, at 600kWh per month it is 28%, which is still pretty steep. Even if they try to use less electricity, the impact will be limited due to Eskom's structural changes as the fixed monthly charges have increased from R195 to R367 per household. The corresponding decrease in the price per kWh is small – from R2.95 to R2.45 (17%). ALSO READ: Electricity tariffs: Ramokgopa reveals how much Eskom customers pay for usage per month Seasonal hurdle for resellers Hopley says the added complication is that Eskom's bulk tariffs are seasonal. This means the reseller pays much more for electricity when winter tariffs apply – in June, July and August – than in the rest of the year. The retail tariffs they must charge end users are however the same throughout the year. Resellers, therefore, used to sell at a loss during the winter months but were able to make up for it during the nine summer months. With the new tariffs, the loss in winter will be much bigger and in summer, the reseller may only break even, which is not at all sustainable. This article was republished from Moneyweb. Read the original here.
IOL News
07-05-2025
- Business
- IOL News
Nersa stands firm on licensing private operators amidst Eskom's court battle
Eskom contends that Nersa violated its own regulations by issuing these licences without the proper industry rules, potentially jeopardising the integrity of the electricity supply chain. Image: IOL/Independent Newspapers Banele Ginidza The National Energy Regulator of South Africa (Nersa) has expressed confidence in its decision to grant trading licences to private electricity operators, despite Eskom's legal challenge. Eskom contends that Nersa violated its own regulations by issuing these licences without the proper industry rules, potentially jeopardising the integrity of the electricity supply chain. At the core of the dispute is Eskom's frustration over licensing that permits private operators to trade electricity, diverging from the traditional path of virtual wheeling agreements. The challenge suggests a fear that these new entrants might cherry-pick the best-paying customers, leaving Eskom burdened with slower-paying clients. Nersa chairperson Thembani Bukula on Tuesday said the dispute Eskom had with the traders revolved around certain areas that traders will take the best paying customers and leave the utility with slow payers. "That dispute is one we will still see ventilated in court, if it comes to that. But the Electricity Regulation Act is very clear, you have to have a licence if you are going generate transmit, distribute, trade import and export," Bukula said. "That is what is being applied right now, but we have not seen the papers, we have heard they will bring the case' around that but as we speak they are already upto 10 traders in this country doing the wheeling." He said Nersa still awaited Eskom's virtual wheeling pilot results from which the regulator would assess and make determination of whether its proper or not. "There were issues around who collects the money and whether there is line of sight between offtaker and generator and those issues have not been finalised," he said. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ Bukula said with curtailment rules having been approved last month, Eskom can use curtailment as an ancillary service and that the amount is in the existing Multi-Year Price Determination (MYPD) and the percentage to be applied would be determined as the process unfolds. Curtailment is expected to harness an additional 3 000MW and the process was expected to solidify over the next three years of the MYPD. Meanwhile, Electricity and Energy Minister Kgosientso Ramokgopa said the release of the updated Regulatory Rules on Network Charges for Third-Party Transportation of Energy was the most consequential intervention in South Africa's electricity sector. "It's going to help us remake the energy and electricity landscape in the country," Ramokgopa said. "It's also consistent with our objective of ensuring that we are able to achieve energy security in the country. We are able to diversify generation sources and we don't only rely on Eskom for electricity generation in the country." Conditions for third-party participation include that participants must be licensed and registered with the Nersa, power purchase agreements, connection and use-of-system agreements must be appropriately concluded and that the grid code compliance and auditable metering were required. The updated wheeling framework is aimed at supporting open access to the electricity network, which will allow consumers to choose power sources – enabling competition and lowering electricity prices. "We are democratising this space. We are not just relying on Eskom as a sole generator of electricity, there will be multiple generators of electricity. And with competition comes efficiency, comes innovation, research and investment, and we are likely going to drive the prices down," Ramokgopa said. "That's why when we talk about affordable electricity, these are part of the elements [and] the components that are going to make it possible for us to make energy affordable for everyone, including the poor and downtrodden and those that are in villages, those are who are in peri-urban areas." BUSINESS REPORT
The Citizen
02-05-2025
- Business
- The Citizen
Winter is coming: Has Eskom got a plan to avoid load shedding?
In January, Eskom shattered its record of 300 days of no load shedding. With winter arriving in South Africa in June, many will be wondering if Eskom is prepared to cope with the cold, harsh weather that puts additional pressure on the electricity grid, leading to load shedding. Winter is expected to arrive on 21 June and make its exit around 22 September. Winter outlook As the country prepares for colder weather, Eskom said it will provide a 'State of the System and Winter Outlook' on Monday. Earlier this week, Minister of Electricity, Kgosientsho Ramokgopa, predicted a load-shedding-free winter for this year. The minister forecast the country's power plants to perform the same as last year, as he saw no reason for their performance to decrease, he said on the sidelines of the second G20 Energy Transitions Working Group in Cape Town on Wednesday. ALSO READ: We just came out of emergency load shedding, but Eskom has high hopes for winter Ramokgopa expressed confidence that generation levels would match or exceed those of winter 2024, with no expected setbacks. Load shedding In January, Eskom shattered its record of 300 days of no load shedding when it imposed stage 3 power cuts after more than 10 months of uninterrupted electricity supply. Since January, there has been infrequent load shedding, and the country hit stage 6 power cuts in February. Ramokgopa at the time said the country had been hit by a 'perfect storm'. Stage 6 Eskom CEO Dan Marokane also dismissed claims that the utility implemented stage 6 load shedding because it failed to get the requested electricity tariff hike from the National Energy Regulator of South Africa (Nersa). In August, the parastatal submitted an application to Nersa for a proposed 36.15% hike during its 2026 financial year, 11.81% in 2027 and 9.10% in 2028. However, in January, Nersa only approved a 12.7% electricity tariff increase for Eskom. Marokane said stage 6 load shedding has nothing to do with the parastatal's failure to receive its desired electricity tariff hike. ALSO READ: Eskom gets boost as Kusile's final unit adds 800MW to grid
IOL News
23-04-2025
- Business
- IOL News
Nersa calls for urgent reforms to integrate gas into South Africa's energy mix
The National Energy Regulator of South Africa has underscored the critical need for accelerated policy and regulatory reforms to firmly establish gas as a cornerstone of the nation's energy landscape. Banele Ginidza The National Energy Regulator of South Africa (Nersa) has recommended acceleration of policy and regulatory reforms to entrench gas in the country's energy mix. This call comes against the backdrop of ongoing concerns regarding the underdevelopment of the local gas industry, which remains heavily reliant on the Sasol Mozambique natural gas project due to a lack of significant indigenous proven gas reserves. According to the strategy report published by Nersa on Tuesday, the energy regulator pointed out that while there's a robust long-term potential for domestic gas production, immediate steps must be taken to diversify gas supply sources. This includes enhancing pipeline connectivity from Mozambique via the ROMPCO pipeline and securing liquefied natural gas (LNG) imports from both regional and international markets. Despite the promising synergies between natural gas and renewables, NERSA noted with concern that both sectors have developed independently rather than in an integrated manner. The report warned that a similar disconnect could emerge as South Africa explores its nascent hydrogen economy, which remains largely conceptual at this stage. Nersa said although a myriad of government policies and strategic plans recognised the need for gas in South Africa's energy mix, the gas industry had not seen significant development beyond the Sasol Mozambique natural gas project. "While opportunities that seek to drive gas development exist, the industry is faced with challenges and barriers that continue to undermine the critical role that gas can play to contribute to the country's energy security and climate change goals," Nersa said. The report further highlighted the limited success of extensive offshore exploration efforts over the last 50 years across South Africa's five major hydrocarbon basins. Only one producing offshore gas field, the PetroSA F-A/E-M, has been discovered, and it has since depleted. Prospects such as the Ibhubesi gas field remain undeveloped, while uncertainty looms over the Total Brulpadda exploration project following TotalEnergies' recent withdrawal. Currently, South Africa imports approximately 160 million gigajoules of natural gas annually from Mozambique's Pande/Temane fields, mainly through Sasol Gas and Kwande Gas via the ROMPCO pipeline. To mitigate the constraints of indigenous gas supply, the country is looking to tap into regional sources such as the Rovuma Basin in Mozambique, Angola, Tanzania, and Namibia, alongside pursuing LNG imports. To facilitate this shift, Nersa has urged the development of more robust gas infrastructure, particularly LNG import facilities at key port locations like Richards Bay, Coega, and Saldanha. A well-defined LNG import strategy is essential to ensure that procurement frameworks deliver competitive pricing and maximise benefits for the South African market. Additionally, the regulator emphasised the importance of expanding pipeline infrastructure to support potential domestic gas production and prioritising new gas-to-power generation capacity. This approach is framed as critical to achieving the scale necessary for the development of extensive gas infrastructure. Nersa has also called for expedited completion of legislative instruments such as the Gas Amendment Bill and the Upstream Petroleum Resources Development Act to provide clarity and certainty in the industry. In recognising the synergy between gas and renewable energy, Nersa is advocating for the implementation of the Gas IPP Procurement Programme as a foundational element within the Integrated Resource Plan (IRP). It encourages aligning the Gas Master Plan (GMP) with ongoing initiatives and proposals, incorporating considerations for converting existing diesel and coal-fired power stations into gas-fired facilities as part of a medium- to long-term strategy. Notably, Nersa has approved five companies for small-scale LNG infrastructure projects, including a small-scale liquefaction plant and storage solutions, with a combined investment of R6.6 billion. Moreover, four companies have been licensed for virtual compressed natural gas (CNG) projects, further supporting the growth of private sector initiatives in the gas landscape. The small-scale LNG market is poised for rapid development, predicted to outpace the traditional gas pipeline sector alongside the anticipated advancements in LNG infrastructure facilitated by the Department of Mineral Resources and Energy's Independent Power Producer procurement programme. BUSINESS REPORT
