Impact of coal prices changes on prices of electricity in South Africa

Abstract

The main purpose of this research is to analyze the impact of changes in coal prices. Scholars insinuated that the extensive capital requirements of building thermal power stations and coal mines lead to power production costs parachuting beyond the reach of many economic players. These rising costs in coal prices and power production costs, the retail price of electricity has not been adjusted, resulting in many players in this industry incurring losses. This study will use Statistical multiple regression and correlation analysis to test the relationship between two variables, coal price changes being an independent variable and changes in the price of electricity being the dependent variable. The findings show a strong dependence between changes in coal prices and electricity pricing in South Africa. People scrambling to coal mining is a concern since no proper regulations lead to land degradation. Moreover, since NERSA regulates electricity prices, miners are forced to use cheaper methods of extracting coal to keep the costs low.