Registered users can save articles to their personal articles list. Login here or sign up here

Nersa to consider three Eskom tariff increases

Public hearings to follow, decision due in August.

The national energy regulator, Nersa, will decide in August whether Eskom’s electricity tariffs will be increased to allow it to recover about R67 billion related to under-recovery and over-expenditure in 2014/15, 2015/16 and 2016/17.

Whatever increase Nersa grants Eskom, the increased tariffs would only be implemented from April 1 2019, and might be recovered over more than one year.

This comes after Nersa in December granted Eskom a mere 5.23% tariff increase for 2018/19, instead of the 19.9% increase Eskom asked for.

If all three applications that are currently before Nersa are granted in full and implemented once-off next year, it would amount to an additional increase of 34%.

Nersa has now published the three applications on its website. The applications were made in terms of the Regulatory Clearing Account (RCA) methodology and Nersa has invited comments before March 23 this year.

The regulator will also hold public hearings in all provinces during May this year.

Source: Nersa

Eskom submitted its application for 2014/15 in May 2016 and claimed R19.1 billion additional revenue related to that year.

A total of R8.7 billion of that is related to lower than expected revenue due to a decrease in sales.

The balance relates to higher than expected costs for independent power producers (IPPs) supplying renewable energy and the cost of running its diesel-hungry open-cycle gas turbines (OCGTs).

The claim for OCGT costs was aligned with Nersa’s decision in the 2013/14 RCA when it only allowed what it would have cost Eskom to generate the same amount of electricity with its coal-fired power stations. Nersa at the time argued that the customers should not be made to pay for Eskom’s failure to keep its more cost-efficient power stations in running condition.

The RCA methodology does not allow Eskom to recover over-expenditure on operating expenditure and Eskom states that as a result, it had to absorb additional costs of R4.9 billion.

The 2015/16 RCA application, which was submitted to Nersa in July 2016, amounts to R23.6 billion of which R15.5 billion relates to under-recovery of revenue due to decreased electricity sales.

The balance is related to higher IPP costs and OCGT and other primary energy costs.

Eskom absorbed over-expenditure of R14 billion in operating expenses and R6.5 billion in OCGT costs.

For 2016/17, Eskom in July last year submitted an RCA claim of R23.8 billion of which R20 billion relates to lower revenue due to decreased sales.

It absorbed R15.3 billion over-expenditure on operating expenditure. A total of R3 billion of savings on coal burn, OCGTs and environmental levy were credited to clients and the net cost claimed amounted to R3.8 billion. This related to primary energy, international purchases and demand market participations, which is when Eskom compensated clients for lowering their demand against the background of a supply shortage.

Eskom is currently facing a severe and urgent liquidity crisis with funders refusing to release funds pending improvements of corporate governance.

The RCA determinations will not be made in time to alleviate Eskom’s immediate problems, but once funders are satisfied on that score, the RCA awards could strengthen Eskom’s balance sheet even before its implementation.

That could increase its access to much-needed funding after the RCA processes have been completed in August.

The RCA applications can be found at www.nersa.org.za > Invitation to comment.

Get access to Moneyweb's financial intelligence and support quality journalism for only
R63/month or R630/year.
Sign up here, cancel at any time.

AUTHOR PROFILE

COMMENTS   2

To comment, you must be registered and logged in.

LOGIN HERE

Don't have an account?
Sign up for FREE

What once provided the cheapest electricity, and was rated as the best energy utility in the world, became an imploding disaster under ANC rule. That fact that it took this disgraceful organisation 20 years to destroy all SOE’s, shows how strong these institutions were when the ANC took control.

The decline of our power utility is a metaphor for everything under ANC rule. Nobody in government accepts responsibility for their actions. In the ANC “the responsibility is shared by the collective”, that means nobody takes any responsibility and that there is zero accountability. The inevitable results are that the implosion of the state and service delivery are also now “shared by the collective”. The buck stops with the voters, so they are ultimately responsible for the Life Isidimeni deaths, the Eskom death spiral, the implosion of SOE’s and the lack of service delivery.

The price of electricity now reached a level that puts it beyond the reach of the citizens, leading to affordability load-shedding. Water and food is next.

More incentive to stay off the grid. Thanks to the cape town Municipality I now collect and store water.
Eskom will make it viable economically to use solar power.
Voila, semi independence.

End of comments.

LATEST CURRENCIES  

USD / ZAR
GBP / ZAR
EUR / ZAR
Insider GOLD
ONLY R63pm

Moneyweb's premium subscription is a membership service which will give you access to a number of tools to take charge of your investments.
Or choose a yearly subscription at R630pa - SAVE R126

Get instant access to all our tools and content. Monthly subscription can be suspended at any time.

Podcasts

GO TO SHOP CART

Follow us:

Search Articles:Advanced Search
Click a Company:
server: 172.17.0.2