Energy regulator grants Eskom almost half of its R27bn application
The National Energy Regulator of SA (Nersa) has approved R13.2bn of Eskom’s R27.3bn regulatory clearing account application, which will have implications in terms of future tariff hikes.
The application was for the 2018/2019 financial year and was based on Eskom’s calculation of its need to be compensated for revenue shortfalls and cost overruns compared with those used by Nersa for its tariff decision.
Public hearings on the application were held in eight provinces in February, during which strong opposition was expressed against the approval of Eskom’s application.
Nersa spokesperson Charles Hlebela said the implementation plan regarding how and when Eskom would recover the approved amount still has to be decided. “The percentage tariff increase will be determined with the approval of the implementation plan,” he said.
Eskom argued that it had suffered a R5.5bn revenue shortfall but Nersa only approved R2.4bn of this. For primary energy costs, such as coal and the open-cycle gas turbines, Eskom claimed R16.8bn but Nersa approved
R11.4bn. Of the R1.7bn claimed for other primary energy, such as water usage, R1bn was approved; and Nersa did not approve any of the R4.8bn claimed for other costs.
Nersa said that in arriving at its decision it had balanced Eskom’s interests and those of the public.
The regulatory clearing account is a mechanism that allows Eskom to claw back certain uncontrollable costs incurred that were not taken into account when Nersa made its tariff decision.
In terms of the methodology used by Nersa to evaluate Eskom’s regulatory clearing account application, it assesses qualifying allowed revenue and qualifying allowed expenditure against the relevant actual revenue and actual expenditure, as well as performance incentivebased adjustments.
“The RCA [regulatory clearing account] balance will be recoverable from the standard tariff customers, local special pricing arrangement customers, and international customers,” Nersa said. The reasons for its decision will be given later and an implementation plan for the R13.2bn will be developed for approval by Nersa within a “reasonable time”.
“The energy regulator records that certain governance failures occurred in Eskom. However, at the time of this decision, and although some of the adjustments were effected in the decision, the extent of the governance failures or amounts associated therewith had not been fully quantified,” it said
“Upon the completion of any investigations by any organ of state or commission into these governance failures, and if the failure is quantified, the energy regulator may, in future Eskom revenue applications, effect adjustments to Eskom’s revenue, based on the relevant outcome of the investigation.”