Eskom’s R60bn green light

A Supreme Court of Appeal ruling has opened the door for Eskom to extract another R60 billion out of clients and has let it off the hook from paying back money it overcharged in 2016.

Eskom spokesperson Khulu Phasiwe confirmed yesterday that the Supreme Court had upheld an Eskom and Nersa appeal against an earlier ruling that set aside 2016’s interim tariff increase and called further similar applications into question.

So Eskom no longer needs to repay some of the 9.4% tariff hike Nersa granted it last year. And now two further revenue applications, totalling more than R40 billion, will reactivate and the door has opened for Eskom to submit two more that might total a further R20 billion.

The increases are based on variances to the assumptions that Nersa based its initial five-year tariff determination (MYPD3) for April 1, 2013 to March 31, 2018 upon. Eskom, for example, used more diesel during the earlier years of the period and got less revenue as sales were below forecasts during the whole period.

Eskom claims the increased cost and lower revenue after the conclusion of every year through the Regulatory Clearing Account (RCA) mechanism.

Last year, intensive users in the Eastern Cape successfully challenged an additional increase Nersa had granted Eskom. The same flaws which affected that increase also affected two further RCA applications and Nersa shelved them pending the SCA ruling.

This ruling has now been given in favour of Eskom and Nersa and resuscitates those shelved applications. Eskom can submit the RCA applications relating to 201617 and 2017-18 in due course.

This comes against the background of an application for a 20% tariff increase that Eskom is expected to submit within the next week or two.