Less than a year after a 31.3 per cent electricity price hike, the National Energy Regulator of South Africa (Nersa) approved an additional 24.8% rise last month, with further increases in the pipeline: 25.8% in 2011 and 25.9% in 2012.

According to Henry Truter, a director at Rennie Property, this will have a significant impact on the tenants of commercial properties and, as a result, the owners too.

“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 electricity 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 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 towards subsidies for low-income domestic users through higher rates.”

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 per cent of total operating expenses, from 22.6 per cent in December 2008.

Truter says 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 the agenda for property owners, managers and tenants.

“The expected increases over the next few years means the cost for electricity in a commercial building can go up to R30/m2 or more.

“Last year we advised stakeholders on how to set up energy management plans for their buildings, and this year we will continue to work with owners and tenants to help them reduce power consumption,” says Truter.