Court sides with Eskom in clawback dispute

Opening the way for the utility to recover billions through tariff increases.
Nersa is yet to indicate when it will review the RCA amounts and make new decisions. Image: Moneyweb

South Africa‘s High Court on Monday sided with Eskom in a dispute over the amounts energy regulator Nersa allowed the state utility to claw back from customers for electricity supplied in the 2014/15, 2015/16 and 2016/17 financial years.

Nersa’s 2018 decisions to allow Eskom to recoup R32.69 billion via a mechanism known as the regulatory clearing account (RCA) for those three years have been set aside, and it must now come up with new decisions.

Monday’s ruling could lead to higher power tariffs, as the court said it appeared Nersa had disallowed Eskom money for lower-than-forecast revenue based on a “fundamental factual error”. It said disallowing some coal costs was not rational.

Higher tariffs would pile pressure on cash-strapped households and business buckling under the impact of the Covid-19 pandemic, but they would be a relief for Eskom, which is mired in financial crisis and has long said the regulator has treated it unfairly.

The RCA mechanism is designed to account for differences between Eskom’s forecast revenue and costs when it applies to Nersa for power tariffs and the actual revenue and costs it subsequently reports.

Eskom had sought R66.6 billion in RCA balances for the three financial years and said in court papers that Nersa had disallowed it amounts for lower-than-forecast revenue, coal costs, independent power producer costs and capital expenditure when it should not have.

Nersa had said it would oppose Eskom’s application but did not file an answering affidavit and later advised via its lawyers that it was withdrawing its opposition.

An Eskom spokesman confirmed three years of RCA decisions had been set aside. A Nersa spokesman could not immediately comment. It was not immediately clear when Nersa would review the RCA amounts and make new decisions.

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How can one even retain your confidence in this screwed up system? Tax payer money is being wasted at Eskom, then wasted on decisions taken by NERSA, and then wasted on court challenges that are later withdrawn, only to give Eskom the power to continue with increases which only leads to further wastage and theft. I cannot see a way forward other than revolt… The people are stretched to the max and I feel a revolution is unavoidable in SA.

Agreed Marcelle Nel.
We are well and truly screwed here. Always thought we had the courts to protect the tax payer to a degree but even this is not the case anymore.
Zim 2.0 and Venezula 2.0 here we come…not much time left I’m afraid.

Sadly I think you are 100% correct

Who says NERSA and ESKOM don’t operate hand-in-hand? This is simply the old BS case of ‘good cop/bad cop’. They are both government agencies. There is absolutely zero need or benefit for them to act against each other.

When, for example, ESKOM applies for a 50% price increase and NERSA ‘intervenes’ on the part of the consumer with the result that ESKOM gets ‘only’ a 30% increase, you don’t think this was planned by both parties in advance?

It makes NERSA look like the good guy, but it’s all just total BS designed to (easily) fool the ANC voters (AKA sheeple).

End of comments.

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