Eskom threatens court action
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.