JOHANNESBURG ( – The interim increase in electricity tariffs would add an additional R2-billion in costs to the South African mining industry, Chamber of Mines (CoM) technoeconomics assistant adviser Dick Kruger says.

Commenting on the National Energy Regulator of South Africa’s (Nersa’s) decision to grant Eskom a 31,3% tariff increase from July 1, 2009, to March 31, 2010, Kruger noted, however, that the CoM accepted that there appeared to be justification for the requested interim price increase.

“The challenge for the mining sector, is that we have a basket of goods and services whose costs are rising at double digit figures in an environment of low commodity prices. This means that a number of mining companies are battling for survival and extra costs add to the burden of the pressures they face in the short term,” he said.

The CoM was also calling on government to delay the implementation of the 2c/kWh environmental level, which it was planning to implement on July 1, until the economic conditions were more conducive.

Nersa announced on Thursday that the environmental levy would be included in the 31,3% tariff increase and not an additional levy, as Eskom had projected in its interim tariff application.

Kruger hoped that Eskom’s funding model and the second multiyear price determination (MYPD 2) would be ready in time for implementation by April 1, 2010.

He asserted that it would also be difficult to engage on Eskom’s true funding costs, except in terms of its basic operational costs, until the power utility had finalised a detailed funding model of how its capital projects going forward would be funded.

Eskom CEO Jacob Maroga had said, earlier this month, that the interim tariff increase would allow the utility time to finalise the funding model and its MYPD 2 application, which it hoped to submit to Nersa by September.

Nersa on Thursday reported that Eskom would now have to submit all future tariff increase applications six months in advance of the implementation date, in order to avoid what had happened with the utility’s interim application.

The regulator, which generally concluded a tariff application within three to six months, had to conclude the interim tariff application within a matter of weeks, as Eskom had made a late submission.