Eskom gears up for nod on tar­iff hike

Afro Voice (KwaZulu Natal) - - Business - THELMA NGOMA thel­man@the­newage.co.za

ESKOM will make a pre­sen­ta­tion at the Na­tional En­ergy Reg­u­la­tor of SA (Nersa) as the reg­u­la­tor em­barks on pub­lic hear­ings into the power util­ity’s ap­pli­ca­tion in terms of the reg­u­la­tory clear­ing ac­count (RCA) bal­ance for the 2014-15, 2015-16 and 2016-17 pe­riod of the third multi-year price de­ter­mi­na­tion (MYPD3), to­talling R66.6bn.

The hear­ings will take place across the coun­try in the next three weeks, from this week un­til the mid­dle of next month with the first ses­sion tak­ing place in Cape Town.

The RCA process is en­trenched in the Nersa MYPD method­ol­ogy and is a glob­ally-ac­cepted reg­u­la­tory prin­ci­ple that rec­on­ciles vari­ances be­tween the pro­jected and ac­tual rev­enue and costs that Eskom in­curred for cer­tain el­e­ments.

The RCA mech­a­nism al­lows Eskom to ad­just for the over or under re­cov­ery to en­sure that both Eskom and the con­sumers are treated fairly.

The under or over re­cov­ery is then catered for through the elec­tric­ity tar­iffs in the fol­low­ing year or sub­se­quent years.

Act­ing chief fi­nan­cial of­fi­cer Calib Cas­sim said Eskom is en­gag­ing in an “open and trans­par­ent man­ner” with all stake­hold­ers to high­light that the RCA under re­view aims to re­cover ef­fi­cient and pru­dent costs in­curred from the pre­vi­ous fi­nan­cial years (2015, 2016 and 2017) and to ac­count for sales vol­ume vari­ances.”

How­ever, en­ergy ex­perts have warned that this will lead to higher elec­tric­ity bills for con­sumers.

Outa’s Ted Blom said the money has to be re­couped from some­where – in this case con­sumers of elec­tric­ity.

He said that should the en­ergy reg­u­la­tor grant the R66bn, it will trans­late into a 30% hike of elec­tric­ity and con­sumers will cer­tainly bear the brunt of it.

In a me­dia in­for­ma­tion ses­sion, Eskom said it was feel­ing pos­i­tive about the pend­ing out­come of the ap­pli­ca­tion.

Nersa pre­vi­ously awarded Eskom an in­crease of 5.23% in tar­iffs af­ter Eskom had asked for 19%, say­ing Eskom needed to con­trol its costs bet­ter.

“Over the past four years, Eskom had been un­able to re­cover the rev­enue al­lowed by Nersa ap­provals – on av­er­age there was a 10% under-re­cov­ery per an­num.

“One of the big­gest con­cerns iden­ti­fied by Nersa was Eskom’s cost over­runs on cap­i­tal ex­pen­di­ture de­spite re­duced in­come from sales rev­enues,” Blom said.

PIC­TURE: GETTY IMAGES

DIRE: Should Nersa ap­prove Eskom’s tar­iff in­crease, en­ergy ex­perts have warned this will lead to higher elec­tric­ity bills for con­sumers.

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