[miningmx.com] – THE Independent Democrats-Democratic Alliance (DA) has launched an attack on Eskom’s application to hike electricity tariffs 16% per year for five years until 2018, according to a report in BDLive.
Speaking at a hearing to assess Eskom’s Multi-Year Price Determination (MYPD), the DA’s Lance Greyling said Eskom’s desire for a 7.8% return in the last year of the MYPD was excessive as listed companies achieved only 5.5% in the past 10 years.
Eskom CEO, Brian Dames and his CFO, Paul O’Flaherty have defended the application saying it was to pay interest on its debt and to achieve an investment rating. South Africa’s goverment had also asked it to revalue its entire fleet five times the original value which had, in turn, lifted depreciation charges.
Greyling argued, however, that Eskom would never be required to replace its entire fleet of power stations all at once.
“The fact is that Eskom will never have to replace its entire fleet all at once, therefore it should not be entitled to claim depreciation on the replacement value of the entire fleet,” BDLive quoted Greyling as having said at the hearing.
“Given that the only shareholder in this case is the South African government, this could in some ways be viewed as a double taxation on electricity consumers,” Greyling said.
“Globally, most electricity utilities only derive a return on equity amounting to 4%, and the DA feels this would be a far more realistic return for Eskom,” he said.
