Eskom told to prove need for price hike
ESKOM has to go back to the drawing board after the National Energy Regulator of South Africa (Nersa) rejected its “secrecy application” and gave it until the end of August to provide information, including its coal volumes as part of its application for a tariff hike.
Business welcomed Nersa’s decision, saying on Friday that granting the application would have seen the state-owned power utility raise electricity tariffs without providing the necessary motivation.
“The application was not in line with good governance and accountability,” Business Unity South Africa (Busa) chief executive Tanya Cohen said.
Busa had opposed the application as it believed Nersa’s decision needed to be in line with its duty to balance the interests of all stakeholders.
It said electricity price increases should be determined with full disclosure of relevant information by Eskom.
The Organisation Undoing Tax Abuse (Outa), which opposed the application in May, said on Friday that Eskom was reluctant to display this information in detail, over the past decade, as it would show how inefficiently it had been managed and how exorbitant its operating costs had become.
“We believe this added level of transparency will highlight Eskom’s transgressions… such as expensive Gupta coal contracts,” Outa’s portfolio director of energy, Ted Blom said.
Eskom said previously it could not meet certain requirements for its application for a 19.9 percent tariff hike in 2018/2019. It applied to Nersa for permission to conduct aspects of the multi-year price determination proceedings (MYPD) in secret, saying it was unable to disaggregate coal volumes and water costs. On research and development, it asked to be exempted from conducting consultations.
Eskom also requested that it be exempted from providing cash-flow statements in terms of the requirements of the Minimum Information Requirements for Tariff Application (Mirta).
It said it would not be able to provide regulated and non-regulated industries as well as provide a 10-year sales forecast.
Nersa said early on Friday that following a meeting on July 27, it had decided that “no condonation would be granted for Eskom’s request to deviate from meeting certain requirements of the MYPD and Mirta.”
Nersa said it was important to take the process through a consultation procedure to comply with fairness principles.
“Notices, comments and public hearings can be an efficient and adequate process of considering the urgency of the matter,” it said.
Eskom spokesperson Khulu Phasiwe said the company was studying Nersa’s decision.
Eskom placed its chief financial officer, Anoj Singh, on special leave amid a pending investigation after he said he signed a R1.6 billion guarantee to Absa Bank for Gupta linked Tegeta Exploration and Resources to buy the Optimum mine.
Nic Roodt, a partner at law firm Fasken Martineau, warned last month that if Nersa allowed Eskom to exclude certain information from the public realm, it would be reasonable for the public to assume that Eskom was trying to cover up inefficiencies and offload costs on to the consumer – particularly when considering the revelations in the recent Gupta e-mails.