Nersa jolts Eskom’s bid to raise R52.8bn
Application for June tariff hike deferred
ESKOM’S bid for a R52.8 billion cash injection took a dive yesterday when the National Energy Regulator of SA (Nersa) postponed its decision on the utility’s urgent application for 12.61 percent tariff increase to the end of June.
A Nersa meeting yesterday decided to defer Eskom’s application for a selective reopener of the third multi-year price determination and map out a way in which the application would be dealt with.
Public input
Nersa spokesman Charles Hlebela said the regulator would allow for greater public input before making its decision and that any tariff adjustment would more likely be made in September.
“The decision will be made on the 29th (of June) but it cannot be implemented immediately,” Hlebela said.
“The regulator will have to give Eskom and the consumers enough time to adjust to the tariff review and it would be unrealistic to expect them to do that overnight.”
Last week Eskom lodged an urgent application for the reopening of the third multi-year price determination.
In the application, Eskom asked for a 9.33c a kilowatthour increase from 74c to be effected either at the beginning of July or September, citing a R32.9bn cost recovery requirement for its open cycle gas turbines and the R19.9bn for short-term power purchases.
The DA yesterday welcomed Nersa’s decision, calling it a victory for all electricity consumers.
DA spokesman for energy, Gordon Mackay, said the party was opposed to further tariff increases that were caused by the overuse of diesel power to
The regulator will have to give Eskom and the consumers enough time to adjust to the review.
keep the lights on.
“Nersa is bound by its mandate to only allow the revenue an efficient operator needs. As the Eskom crisis deepened in recent months, government has repeatedly stated its support for higher tariffs.
“Going forward, Nersa will have its job cut out to maintain its independence and balance the needs of Eskom, its shareholders and consumers,” Mackay said.
Eskom spokesman Khulu Phasiwe said yesterday that the utility had anticipated that it could not get the price review it wanted because of factors beyond its control.
“The additional 12.61 percent adjustment is not something that we needed as of tomorrow, we already have the April adjustment that we are currently working on so were going to effect it way later.
“But we are happy that the regulator has not rejected our application so we cannot rush it to make a decision today; we will have to wait until it is ready,” Phasiwe said.
Nersa said it would encourage stakeholders and the public to participate in the process by submitting written comments or attending the representation from June 23 to 24.
The regulator said Eskom had been asked by the Treasury to amend its price structure for the current financial year by Friday, in time for municipalities to factor in the adjustments when they finalise their budgets by the end of the month.
The SA Local Government Association (Salga) was not immediately available for comment.
Municipalities
But experts warned yesterday that the postponement of the decision could have far reaching implications for municipalities that sell electricity to residents.
Energy analyst Roger Lilley said municipalities normally adjusted their prices to get nominal profit in order to subsidise other services and pay their debt to Eskom.
Lilley said the postponement would mean that the municipalities would have to use the existing price structure in their plans.
The Energy Intensive User Group of Southern Africa said it would oppose Eskom’s application because it would have far reaching implications for the overall economy.
Spokesman Shaun Nel said it would be making representation to Nersa to impress on the magnitude any proposed increase could have on industries.
Meanwhile, Parliament’s select committee on appropriations yesterday expressed concerns over the Treasury decision to withhold equitable share from municipalities.
“The committee is of the view that collaboration with various committees of Parliament needs to take place to resolve the challenges municipalities face, and to deal with any discrepancies in billing systems that municipalities may experience,” committee chairman Seiso Mohai said.