South Africa’s energy regulator, the National Energy Regulator of South Africa (Nersa), has issued an apology for a significant R54 billion ($3.1 billion) error in calculating electricity tariffs. This miscalculation will ultimately affect consumers, as it pertains to the pricing set for state power utility Eskom.
Nersa announced the error last month but provided limited details initially. On Wednesday, it clarified that the mistake stemmed from a “data input error” identified by Eskom during a presentation to lawmakers. The regulator acknowledged that while the issue was detected prior to the tariff determination made in January, it was not corrected at that time and was only discovered five months later. The regulator described the situation as “regrettable” and stressed that it should not have occurred.
Impact on Electricity Prices
This incident has heightened concerns regarding the rising cost of electricity in South Africa. As a result of the miscalculation, electricity prices are set to increase by 8.76% in the upcoming financial year, rather than the previously agreed increase of 5.36%. Furthermore, the following year’s increase will be 8.83%, up from the anticipated 6.19%.
Since 2008, electricity costs in South Africa have surged eightfold, according to the Energy Intensive Users Group (EIUG), which represents major consumers like Anglo American Plc and Glencore Plc, accounting for approximately 40% of the country’s electricity usage. The EIUG has called for a review of the tariff decision made in January and urged Nersa to reassess its pricing methodology and implementation.
Ministerial Response
Electricity Minister Kgosientsho Ramokgopa expressed that Nersa’s error has significantly impacted the affordability of electricity in the country. He indicated that this miscalculation necessitates a reevaluation of the overall strategy for power provision in South Africa.
In summary, Nersa’s apology for the R54 billion miscalculation underscores the ongoing challenges in the energy sector and the pressing need for effective regulatory oversight to ensure fair pricing for consumers.