South Africa warns of electricity tariff hikes until 2015

21:49, January 12, 2011      

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Energy services company Manoa, Wednesday warned business in South Africa to prepare for a series of steep electricity tariff hikes that is expected to hit the country until 2015.

According to the Department of Energy's latest Integrated Resource Plan (IRP) which details the country's long-term energy generation and usage prospects, the price increases will be used to help fund urgently-needed electricity generation projects worth billions of Rand.

"The price increase will be quite steep until around 2014/ 2015- - as high as 25 percent -- in order to fund the capital outlay required for increasing South Africa's electricity generation capabilities. After that, the increases are expected to taper somewhat," Manoa director Esmé Bluff said it a statement issued Wednesday.

"Companies need to be aware of the risk this presents and start doing something about it. However, if this is not the case, the power cuts we're expecting to begin from next year and run up until 2016 will be far worse than even the Medium Term Risk Mitigation Plan suggests," reads part of the statement.

IRP is a long term electricity capacity plan which defines the need for new generation and transmission capacity for the country.

The IRP, driven by the National Energy Regulator of South Africa and Eskom, is the result of a highly consultative process involving various stakeholders, including business, which started earlier this year.

"The IRP has used historical figures regarding electricity usage to arrive at predicted future electricity demand, which would be OK if it weren't that South Africa had experienced rolling black outs in 2008/ 2009," Bluff said.

"However, the reality is the demand at that time was far higher than Eskom's ability to supply. That means the real figures -- had there been no power cuts -- would have been far higher."

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