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