South African state-owned power utility Eskom has taken its dispute over electricity tariffs with the National Energy Regulator of South Africa (NERSA) to court, considering that the tariffs approved for the years 2019-2020, 2020-2021 and 2021-2022 were too low and would threaten Eskom's financial health.
In March 2019, NERSA allowed Eskom to increase its tariffs by 9.4%, 8.1% and 5.2% over the next three years. The company, which was seeking a much higher increase (+16.6% for 2020-2021 and +16.7% for 2021-2022), considered that this moderate tariff hike would lead to a planned revenue shortfall of around ZAR100bn (US$6.7bn). In addition, Eskom claims that NERSA failed to treat ZAR69bn (US$4.8bn) in state bailout obtained from the South African government.
Eskom’s debt reaches ZAR450bn (US$31bn), mostly because the company financed the construction of two large coal-fired power plants, Medupi and Kusile. The utility considers its financial situation is also a consequence of low tariffs, fixed by the regulator at a level inferior to its costs.