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Nersa sets timetable for adjudication of Eskom’s 20.5% tariff application

Nersa will make virtual provincial hearings between January 17 and 21

Nersa will make virtual provincial hearings between January 17 and 21

Photo by Creamer Media

8th December 2021

By: Terence Creamer

Creamer Media Editor

     

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The National Energy Regulator of South Africa (Nersa) has finally initiated public consultations on Eskom’s 2022/23 revenue application, following a long delay that culminated in a December 3 court order instructing the regulator to make a tariff determination by no later than February 25.

The paper has been released together with Eskom’s fifth multiyear price determination (MYPD5) revenue application, which covers a three-year period, but the adjudication will be confined to the coming financial year, in line with the High Court judgment.

Eskom has applied for allowable revenue of R279-billion for 2022/23, excluding the R14.4-billion awarded to Eskom as a result of previous regulatory clearing account (RCA) determinations, which the regulator has already approved to be liquidated in the coming financial year.

The allowable revenue application together with the RCA decision translates to R293-billion, which if approved, would result in a 20.5% increase in the standard tariff from April 1. The municipal tariff increase would be 21%, effective from July 1, should Eskom’s full application be approved.

Eskom CFO Calib Cassim confirmed the utility's request for a 20.5% increase in a media statement, in which he also confirmed that the remaining two years of the MYPD5 application remained the subject of a court review application and would, thus, not be decided in February.

The application includes R79.6-billion for primary energy, R4.6-billion for international purchases, R70-billion to buy electricity from independent power producers, R66.7-billion for operating costs, R68.3-billion in depreciation, R6.6-billion for the environmental levy, R2.7-billion for the carbon tax and R5.7-billion for arrear debt.

A negative amount of R25-billion has also included for return on assets to allow for a slower migration of the price increase.

The application does not include any RCA amounts applied for but not yet approved and also does not anticipate any additional revenue being returned to it in 2022/23 following the regulator’s decision to illegally deduct a R69-billion equity injection from the utility’s allowable revenue for the period 2019/20 to 2021/22.

The matter is before the Supreme Court of Appeal, which will not make a ruling in time to influence the next tariff decision.

This did not stop Nersa from including an alarming table in its consultation paper outlining a possible hike of 54.35% for the coming financial year.

The calculation includes all RCA amounts, including those that have not been adjudicated, as well as the reintroduction to allowable revenue of a R46-billion government equity injection previously excluded.

Eskom said Nersa has "misrepresented Eskom’s revenue application to include various matters that are still under consideration by both the courts and by Nersa itself".

In line with the court order, Nersa has set 16:00 on January 14 as the closing date for stakeholder comments on the consultation paper on Eskom’s revenue application and will conduct virtual provincial hearings between January 17 and 21.

Hearings for the Western and Eastern Cape province have been scheduled for January 17, to be followed by KwaZulu-Natal (January 18), Free State, Mpumalanga and Limpopo (January 19), Northern Cape and North West (January 20) and conclude with Gauteng on January 21.

Nersa’s Electricity Subcommittee will meet on February 2 to recommend the draft decision and reasons for decision, with the Energy Regulator to make a final determination on February 25.

Edited by Creamer Media Reporter

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