- In a complicated press statement released last week, South Africa’s energy regulator, NERSA, announced that it approved a tariff for Eskom of 133.64c/kWh for 2021/22 and 146.48c/kWh for 2022/23, which results in an increase of 9.61%.
- Eskom’s revenue application was R279bn, excluding RCAs.
- NERSA’s approved allowable revenue is R250bn after considering adjustments for inefficiencies. Eskom’s original application was for 14.58% and NERSA approved 3.49%, excluding RCAs.
- Eskom awaits the reasons for the decision that will provide further details on how the revenue determination was arrived at.
The Energy Regulator made its decisions after conducting the due regulatory process, which included publishing Eskom’s revenue application and inviting written comments from stakeholders. The Energy Regulator also conducted public hearings to solicit comments from interested and affected stakeholders. As a result, NERSA received more than 60 000 comments from private individuals, who all raised affordability concerns.
The energy regular argues that its decision provides a balance between the sustainability of Eskom and the economic well-being of the consumers and the economy. The full ‘Reasons for Decision’ document will be available on the NERSA website at www.nersa.org.za in due course, the utility said in a statement. Link to full statement HERE
Eskom responded by commending the regulator for making the revenue determination timeously as it will now allow Eskom to apply the adjusted price to customers.
Eskom had made its Multi-Year Price Determination (MYPD) 5 revenue application to NERSA on 2 June 2021 for the FY 2023 to 2025 in accordance with the prevailing NERSA methodology, as published in 2016. On 30 September 2021, the Energy Regulator rejected the application. Eskom was required to make a new application based on a methodology yet to be published. Eskom successfully reviewed this Energy Regulator decision in the High Court with regards to FY 2023.
The Court provided NERSA with a timeframe to undertake its consultation, analysis and determination process. NERSA has ensured that these timelines have been met.
Calib Cassim, Eskom’s Chief Financial Officer says: “The financial implications of this decision on Eskom’s long-term sustainability will need to be further understood. It is understood that NERSA considered the impact on consumers and the financial sustainability of Eskom as it made its decision”.
Eskom added that their Board will deliberate further before deciding on how to continue to sustainably provide electricity to the extent possible in the context of this revenue decision. “In addition, Eskom keenly awaits the reasons for the decision that will provide further details on how the revenue determination was arrived at”, said the energy utility.
Author: Bryan Groenendaal