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Africa|Energy|Financial|Paper
Africa|Energy|Financial|Paper
africa|energy|financial|paper

Nersa yet to decide if it will oppose Eskom’s MYPD5 court application

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Photo by Creamer Media

19th October 2021

By: Terence Creamer

Creamer Media Editor

     

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The National Energy Regulator of South Africa (Nersa) has confirmed the receipt of Eskom’s High Court application, through which the utility is seeking to have the regulator’s decision to reject its fifth multiyear price determination (MYPD5) revenue application reviewed and set aside.

However, Nersa has yet to decide whether it will be opposing the application.

Eskom approached the courts on October 15 after the regulator voted, on September 30, to reject its MYPD5 submission, which covers the three financial years from 2022/23 to 2024/25.

Nersa rejected the application on the basis that it would be overhauling the MYPD methodology used as the basis for preparing the application, which was submitted to Nersa in June.

On September 24, Nersa released a consultation paper on a possible new methodology, indicating that the current methodology had failed to provided price stability and that a new approach was also required owing to changes under way in the electricity supply industry, including the impending unbundling of Eskom.

A closing date for written comments has been set at October 22 and Nersa hosted its first virtual public consultation workshop on the proposed new methodology on October 18, with another one planned for October 22.

In its review affidavit, Eskom describes the rejection of its MYPD5 submission as “patently irrational and unlawful” and requests that it be set aside.

Eskom is asking the court to grant it urgent interim relief in the form of an order directing Nersa to process the 2022/23 revenue application under the existing tariff methodology so that a “lawful tariff” can be determined for the upcoming financial year, which begins on April 1.

Such relief is necessary, Eskom argues, to provide a lawful route to determining an Eskom tariff for the 2022/23 financial year in the limited time remaining before March 15, when that tariff has to be tabled in Parliament in accordance with the requirements of the Municipal Finance Management Act.

Eskom argues that the interim relief sought by Eskom is of national importance because without a validly determined tariff for 2022/23, Eskom will be financially unsustainable, as it will have “zero revenue” for the 2022/23 financial year.

“The required revenue to allow Eskom to continue operating will be more than the total allowable revenue for the 2021/22 financial year of over R260-billion.

“Moreover, because more than R350-billion worth of Eskom debt is linked to over R900-million in interlinked national government guarantees, if Eskom’s finances collapse, the finances of the entire national government are at risk,” the utility’s affidavit reads.

In response, Nersa says it is studying the application and will “advise whether it will be opposing the judicial review application within the required time frame and process”.

Edited by Creamer Media Reporter

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