Part 1 Revenue Application: Multi-Year Price Determination ... - Eskom

Overview of Multi-Year Price Determination
2013/14–2017/18 (MYPD 3)
Figure 20: Megaflex, Miniflex and Ruraflex Urban Small and Nightsave Rural TOU tariffs
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To ensure system stability while there are major constraints on the grid and a low reserve
margin, it would be prudent for the sake of system stability, to postpone any significant
amendments to the TOU tariffs until the Eskom reserve margin increases - at least until
Medupi and Kusile are commissioned.
Eskom therefore proposes only a small change to reduce the peak winter energy price so
that the ratio of the summer off-peak to winter peak is 1:8. This change needs to be
balanced against higher increases to summer peak and standard periods.
6.2.5 Timing of tariff increases
In line with Eskom‟s financial year (1 April to 31 March), all customer tariffs should increase
on 1 April. However, in terms of the Municipal Finance Management Act (MFMA), Eskom is
only allowed to increase municipal tariffs on 1 July of any year. Currently, Eskom has to
recover a year‟s worth of revenue from municipalities at the previous year‟s rates in the first
three months, while the remainder of the revenue for its financial year is recovered at the
new rates in the last nine months.
As a result the tariff increase that municipalities receive is different to that received by
Eskom‟s direct customers. This apparent inconsistency has caused confusion due to the
average increase that Nersa announces not being the one that is applied to municipalities.
Because changing the municipality increase date would require amending the MFMA,
Eskom considered moving the increase for its non-municipal customers to 1 July to align
with its municipal customers‟ increase date. This means that non-municipal customers would
continue to pay the current rates and would not see any increase for the first three months of
the first year of MYPD 3 (2013/14) and would receive their annual tariff increase on 1 July