Johannesburg -Almost a month after the National Energy Regulator of SA (Nersa) recommended that Eskom submit a new multi-year price determination (MYPD) application within three months, Eskom had not taken a decision on the matter, the utility said yesterday.
Early this month, Nersa approved a 9.4 percent increase in Eskom’s tariffs for the 2016/17 financial year. The increase becomes effective on Friday next week. As part of its decision, the regulator said Eskom should submit a new MYPD application.
But Eskom’s ability to meet such a tight time frame is doubtful. The utility is unlikely to submit a rushed MYPD application. An MYPD application is based on a number of projected scenarios and cost estimations. These include economic growth, inflation, plant performance and primary energy costs. Significant shifts in some of the assumptions were behind Eskom’s application to recover R22.8 billion.
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Nersa this month approved a recovery of R11.2bn. Eskom’s so-called Regulatory Clearing Account application covered 2013/14 – the first year of the current MYPD.
The utility’s spokesman Khulu Phasiwe yesterday confirmed that Eskom had yet to make a formal decision on a new MYPD application.
Public hearings
Eskom’s previous MYDP applications have taken much longer than three months as the information supplied to Nersa must withstand public scrutiny during public hearings. “Management will submit its recommendation to the board on Nersa’s recommendation. It is one of the items to be discussed at the next board meeting. After formally briefing the board, we will indicate what our next step will be,” Phasiwe said.
The length of Eskom’s next MYPD has also been a subject of speculation after its chief financial officer, Anoj Singh, reportedly raised the possibility of a 10-year MYDP last year.
Phasiwe said yesterday that Eskom had not taken a decision on the length of the next MYPD. “This was a proposal from some of our customers who felt the five years was too short. But we have not taken the matter to the board and certainly we have not raised it with Nersa,” he said.
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A longer MYPD period, however, is likely to raise the risk of erratic forecasts of Eskom’s revenue requirements.
MYPD 1 and MYPD 2 covered three years. But in 2012, Eskom proposed a five-year price determination, saying the move would ensure a more gradual and predictable price path for households, businesses and investors.
Nersa spokesman Charles Hlebela said yesterday that the regulator had had no indication from Eskom about the submission of a new MYPD.
“We will wait for their response,” he said.
Meanwhile, Hlebela said the regulator was finalising the reasons for decision on the Eskom application. “Before we publish the reasons for decision, Eskom must indicate if there is confidential and commercially sensitive information that we should remove. We are at that stage now,” he said.
The reason for the document is that it gives details of Nersa’s decision. Nersa is required by law to explain its decisions.
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