NERSA GIVES ESKOM A ‘ONE-OFF’ TAR­IFF HIKE

CityPress - - Business - DE­WALD VAN RENS­BURG de­wald.vrens­burg@city­press.co.za

Eskom will be al­lowed to raise its power tar­iffs by 12.7% next year to bring in an ex­tra R7.8 bil­lion, the Na­tional En­ergy Reg­u­la­tor of SA (Nersa) an­nounced on Fri­day.

Then, in 2016 and 2017, Eskom will have to re­vert to the 8% in­creases it is al­lowed to im­ple­ment in terms of the cur­rent mul­ti­year price de­ter­mi­na­tion (MYPD).

Nersa had ap­proved the re­cov­ery of this money from the reg­u­la­tory clear­ing ac­count in July.

But it has only now made up its mind about how Eskom will be al­lowed to do it.

Nersa could have made Eskom ap­ply fewer in­creases over a pe­riod of years, but de­cided on a “one-off” re­cov­ery for the cash-strapped power company.

Eskom had asked to re­cover far more – R18.4 bil­lion in to­tal.

How­ever, Nersa trimmed that down by, among other things, not let­ting Eskom re­cover the cost of the mas­sive un­bud­geted quan­ti­ties of diesel it is burn­ing in peak power plants in the Western Cape prac­ti­cally around the clock.

Since the elec­tric­ity cri­sis of 2008, Nersa sets the al­low­able tar­iff in­creases in th­ese mul­ti­year de­ci­sions.

The ex­tra money Eskom gets to squeeze out of cus­tomers comes from rev­enue and ex­pen­di­ture forecasts be­ing off the mark in MYPD2 be­tween 2010 and 2013.

This third MYPD started last year and ends in 2018.

The process is meant to pro­vide the power company with ex­actly the money Nersa be­lieves it needs to carry out its job of build­ing power sta­tions and run­ning the power grid.

Eskom had an an­nual rev­enue of R140 bil­lion in its last fi­nan­cial year, equalling 62.8c kilo­watt per hour of elec­tric­ity sold.

Most con­sumers pay much more than that be­cause bulk buy­ers get lower rates and house­holds tend to get sup­plied through mu­nic­i­pal mid­dle­men who also make a profit.

This makes it un­likely that any given con­sumer will ex­pe­ri­ence pre­cisely the Ner­saap­proved in­crease.

Eskom had orig­i­nally wanted Nersa’s bless­ing to in­crease power tar­iffs by 16% ev­ery year of the MYPD3 pe­riod, mak­ing the reg­u­la­tory clear­ing ac­count con­ces­sion an­nounced on Fri­day a very small drop in a large fi­nan­cial hole that prin­ci­pally re­lates to the build­ing of the Medupi and Kusile power sta­tions.

Ear­lier this month, the Na­tional Trea­sury agreed to help Eskom with new eq­uity by “lever­ag­ing non-strate­gic gov­ern­ment as­sets” and let­ting Eskom bor­row more money.

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