Eskom threat­ens court ac­tion

The Sunday Independent - - Business Report - Siseko Njobeni

ESKOM is threat­en­ing to haul the Na­tional En­ergy Reg­u­la­tor of South Africa (Nersa) to court to force it to raise its tar­iff in­creases.

In an un­prece­dented move this week, Eskom chair­man Jabu Mabuza said the reg­u­la­tor’s 5.23 per­cent tar­iff in­crease for the 2018/19 fi­nan­cial year was not enough to ad­dress Eskom’s fi­nan­cial sus­tain­abil­ity and liq­uid­ity.

Mabuza said the in­crease did not re­flect the true cost of sup­ply­ing elec­tric­ity.

He said Nersa could not review its own de­ci­sion “re­gard­less of whether they agree with our point or not. We tried to find a way of bridg­ing this dif­fer­ence. Sadly, only a court can set aside an ad­min­is­tra­tive de­ci­sion.

“I re­ally do not take plea­sure in this ex­er­cise but I have to ad­vance, pro­tect and pro­mote Eskom’s in­ter­ests.”

Nersa ap­proved an al­low­able rev­enue of R190 bil­lion for 2018/19 – against Eskom’s ap­pli­ca­tion for R219.5bn in De­cem­ber last year.

How­ever, Eskom said ear­lier this year that the de­ci­sion was in con­tra­ven­tion of the Elec­tric­ity Reg­u­la­tion Act and the multi-year price de­ter­mi­na­tion (MYPD) method­ol­ogy, which Nersa uses to as­sess its rev­enue ap­pli­ca­tions.

Mabuza said Eskom had de­cided to take the mat­ter to court in or­der to re­solve the im­passe.

“We are clear that, at the end of the day, the court is not go­ing to be able to give us a tar­iff. There is an appreciation on the side of Nersa that there are no hard feel­ings,” he said.

Nersa spokesper­son Charles Hle­bela on Fri­day said any of Nersa’s de­ci­sion could be taken on review. “That is pro­vided for,” he said.

Hle­bela con­firmed that the reg­u­la­tor was aware of Eskom’s in­ten­tion to take the lat­est de­ci­sion to court. “Nersa had re­ceived a no­tice of mo­tion to take the tar­iff de­ci­sion for ju­di­cial review,“said Hle­bela.

Eskom has chal­lenged sev­eral as­pects of Nersa’s de­ci­sion. These in­clude the reg­u­la­tor’s as­ser­tion that the power util­ity had 6 232 too many em­ploy­ees. Eskom ques­tioned the ve­rac­ity of Nersa’s fig­ures.

“Nersa ap­plied a re­duc­tion in head­count based on 2008 power sent out, ver­sus 2019 es­ti­mated power sent out,” Hle­bela said.

Eskom also claimed Nersa did not con­sider in­creases in cus­tomers, new build­ing op­er­a­tions and a change in busi­ness model.

Mabuza said: “We are the first to ac­knowl­edge that, over the past 10 years, it is true our rev­enue has grown by about 12 per­cent on av­er­age and our pro­duc­tion has grown on av­er­age by about 1.01 per­cent.”

In its Rea­son for De­ci­sion doc­u­ment on Eskom’s 2018/19 tar­iff, Nersa said in 2007 the power util­ity was able to pro­duce 239 109 Gi­gawatt hours (GWh) with 32 954 em­ploy­ees, which re­sulted in 7.26GWh per em­ployee.

In its tar­iff ap­pli­ca­tion, the util­ity ap­plied to pro­duce 216 771GWh with 39 186 em­ploy­ees which trans­lated to 5.3GWh per em­ployee.

“This means Eskom is pro­duc­ing less gi­gawatt hours with more em­ploy­ees and higher em­ployee costs,” Nersa said.


Elec­tric­ity power lines and cool­ing tow­ers at Eskom’s Kendal coal-fired power sta­tion in Del­mas.

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