Tariff hike shock for Eskom

ESKOM expressed disappointment yesterday at the National Energy Regulator of SA’s (Nersa) decision to deny it a 19.9% electricity tariff hike for the 2018-19 financial year.

Instead, the regulator announced it would grant Eskom a 5.2% price hike from April 1 next year until March 31 in 2019.

“Eskom will await the regulator’s reasons for decision document for the 2018-19 allowed revenue in terms of the multi-year price determination methodology,” the utility said.

“Nersa chairperson Jacob Modise yesterday afternoon announced it would soon publish a document with full reasons for the price hike.

“In making its decision, the energy regulator has considered the public interest and the inputs received from stakeholders,” Modise said.

“It is important to indicate that the National Energy Regulator Act enjoins the energy regulator with the requirement that its decisions must be in the public interest. In addition, the Electricity Regulation Act has embodied the regulatory framework, which necessitate a fair balance between the interests of customers and end users, and those of licencees and investors in the electricity industry.”

Eskom had applied to collect revenue of R219.5 billion based on “eight broad categories”, Modise said. The categories included operating expenditure, buying from independent power producers, demand management and a return on assets.

Nersa said after publishing Eskom’s application on its website in September, 23 000 written comments were received.

“The energy regulator conducted public hearings in eight provinces from October 30 to 22 November 2017. The public hearings afforded interested stakeholders the opportunity to submit their views… a total of 96 oral presentations were made.”

Some of the arguments against Eskom’s application included that the demand for electricity was not expected to rise and it was “inconceivable that consumers have to pay for a return on assets under construction… as well as the depreciation of the very same assets”.

“They are excessive. Eskom must reconcile the two and the difference should form part of the tariff as a reduction or an increase,” a comment said. – African News Agency (ANA)