25 February 2010 – Less than a year after a 31.3% price hike, the National Energy Regulator of South Africa (Nersa) yesterday approved an additional 24.8% rise, with further increases in the pipeline: 25.8% in 2011 and 25.9% in 2012. According to Rennie Property, South Africa’s leading specialist commercial property management company, this will have a significant impact on the tenants of commercial property and as a result, the owners as well.
So it is now more important than ever before for owners, property managers and tenants to work together to reduce electrical expenditure. Ironically, with an upswing in the economy, increased activity is helping to drive electrical use this year.
Although Nersa did not simultaneously introduce the controversial energy conservation scheme penalties for large electrical users, it is expected that this may still be launched later this year.
We are still waiting for the details of the price rise, and just how commercial property will be affected. However it seems likely, that similar to last year, commercial property and larger residential users will contribute through higher rates towards subsidies for low-income domestic users.
Unsurprisingly, electricity continues to be the largest operational cost for commercial property, according to the August 2009 South African Property Owner’s Association (SAPOA) report. Expenditure on electricity rose to more than 27% of total opex, from 22.6% in December 2008.
Henry Truter, director at Rennie Property, said: “If the 2009 price hikes were a wake-up call to the property industry, these latest price hikes are a startling reminder that power consumption needs to be high on property owners’, managers’ and tenants’ agendas.
“The expected increases over the next few years means the cost per square meter for electricity in a commercial building can go up to R 30 or more.
“Last year we advised stakeholders on how to set up an energy management plan for their buildings, and this year we will continue to work with owners and tenants to help them reduce power consumption, within the scope of their individual situations.”
South Africa’s power utility, Eskom, requested the price hike in order to fund a R 385 billion capital expansion plan over the next five years.
Released on behalf of Rennie Property by:
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