Lynne Brown.  Picture: TREVOR SAMSON
Lynne Brown. Picture: TREVOR SAMSON

The South Local Government Association (Salga) has decried a decision by Public Enterprises Minister Lynne Brown to postpone the introduction of new electricity tariff hikes, saying this would be problematic for municipalities’ budget planning.

Brown made the request last week, when she asked Parliament to postpone the tabling of the National Energy Regulator of SA’s (Nersa’s) approved 2.2% tariff increase.

The DA said on Sunday that the postponement would delay municipalities’ budgeting processes and leave councils open to legal challenges.

The unintended consequence would have an adverse effect on front-line services, as well as creating uncertainty among consumers, especially bulk electricity users such as businesses, said the DA.

Salga electricity and energy head Nhlanhla Ngidi said: "I’m afraid that the DA’s concerns are also the same as Salga’s concerns and its members. These delays pose serious ramifications for municipalities."

Ngidi said municipalities had to factor Eskom tariff increases into their budgets before tabling them to councils and the
Treasury, a process that had to be concluded before the end
of March.

"Now you can imagine the possible chaos with the Eskom delay," he said.

The postponement Brown asked for would delay municipalities submitting budget proposals to the Treasury. This, in turn, would delay whatever plans municipalities had for their respective communities.

Alternatively, municipalities could work around this by not factoring the new tariff hikes into their budget plans.

Brown has until April 5 to table the increase. But a tariff hike was supposed to kick in on April 1, when 2017-18 starts.

The DA said the last-minute postponement was unacceptable and that the opposition party would challenge it by submitting questions to Parliament to get clarity on why the minister had waited this long to ask for a postponement.

The DA said it would also submit questions to the Treasury to ask on which financial year the new tariff structure could be factored.

"It is, therefore, vital that we get to the bottom of this delay to ensure that service delivery is not hampered," the DA said.

However, the department said on Sunday that it was incorrect for the DA to say that Brown had asked Parliament for a postponement and that only the finance minister could grant such a postponement.

"Minister Brown will be tabling the 2.2% increase on April 5 in full compliance with the extension granted by the finance minister."

Eskom as said in the past that it considers renewables a pass-through cost and whatever they cost must be recovered in full from the tariff.

In February, Nersa granted Eskom a 2.2% tariff hike, leaving the power utility with R10bn to recover. But the regulatory framework makes provision for Eskom to appeal and, if the
power utility feels it has reached an impasse, it can go to court.

Last week, Brown said that the 2.2% tariff increase posed a significant challenge to Eskom’s revenue and the power utility’s ability to meet its debt repayment obligations.

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