Tariff talks extended
PRE-EMPTIVE: REGULATOR MOVES TO MITIGATE DELAY IN NEW METHODOLOGY
Eskom wants a total increase of 32.66% in 2023-24 and 9.63% in 2024-25.
In a surprise move, energy regulator Nersa’s electricity sub-committee on Tuesday decided to extend its imminent stakeholder consultations on Eskom’s tariff beyond the next financial year to include those for 2024-25 as well.
Eskom wants a total increase of 32.66% in 2023-24 and a further 9.63% in 2024-25.
This was done to give certainty to electricity users about the tariff path for the next two years and as a risk-mitigating measure in case the new tariff methodology Nersa has proposed is not finalised by 30 September.
The decision stopped short of any commitment to base the tariff determination on the current multi-year price determination methodology (MYPD4), as the regulator seems to be keeping its options open.
This comes against the background of calls by stakeholders to extend the month given for comment on the proposed methodology. The deadline is tomorrow.
At a recent workshop Nersa full-time member for electricity Nhlanhla Gumede said there is no time to waste in finalising the new methodology as the current one is no longer appropriate.
He did not answer a question about the implementation date Nersa is working towards.
Approval of consultation paper
The meeting on Tuesday was held to approve the consultation
paper on the tariff determination for 2023-24 that Nersa must publish on 1 August at the latest, according to an order of the High Court in Pretoria.
The order follows a tariff debacle that started with Nersa’s rejection of Eskom’s application for the fifth multi-year determination (MYPD5) covering the three-year period 1 April 2022 to 31 March 2025 because it was based on MYPD4.
Nersa held that MYPD4 was no longer valid as it was linked to the previous tariff period and it expected Eskom to tweak its application on the basis of principles that would underpin a methodology developed in the future.
Eskom obtained an urgent court order that forced Nersa to process the 2022-23 tariffs in accordance with MYPD4.
It also persisted with an application
to have the rejection of its application reviewed and set aside.
Eskom and Nersa reached an agreement that was made an order of court this month, for Nersa to publish the application for 2023-24 by 1 August for public comment and reach a decision by 24 December following MYPD4.
Court’s stance on tariff determination
Regarding the tariff determination for 2024-25, the court determined “if Nersa publishes a new pricing determination methodology and reviews all other related regulatory requirement[s] for the industry by 30 September 2022, Eskom shall submit a revised 2024-25 revenue application by no later than 1 June 2023 to Nersa for consideration and approval by 20 December 2023”.
This seems to be the reason
for Nersa’s reluctance to extend the comment period for the new methodology. It was hoping to meet the 30 September deadline.
Even if the methodology itself is finalised by 30 September, Nersa will also have to satisfy the requirement to review “all other related regulatory requirements” by the same date.
Eskom recently listed at least nine documents that licensees are bound to, which must be reviewed before a new methodology can be implemented.
These include the South African Grid Code and the South African Distribution Code, the Minimum Information Requirements for Tariff Applications, the Eskom Retail Tariff and Structural Adjustment Methodology and the Regulatory Reporting Manual.
It is not clear if any work has been done in this regard yet.