Nersa to ensure Eskom sticks to ‘cost-reflective’ hikes

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Sapa

THE NATIONAL Energy Regulator (Nersa) confirmed yesterday that it aims to heed Eskom’s call for cost-reflective electricity prices by 2018.

Nersa’s Thembani Bukula said the regulator would receive Eskom’s medium term tariff application, called MYPD3, by the end of the month, then hold consultations for two months before deciding on the increase regime for the next five years.

“We have done our own calculation of what the price increase needs to be, to be cost-reflective. Our own model gives us an impression, but we need certain inputs from industry,” he said on the sidelines of a briefing to parliament’s portfolio committee on energy.

The consultation period will end on November 30. Nersa will then hold public hearings on the tariff increases in January, before announcing a decision at the end of February, he told the committee.

Eskom spokeswoman Hilary Joffe confirmed that they received extensive comment on its application from the National Treasury and the SA Local Government Association on Tuesday.

Asked whether the finance ministry recommended Eskom adjusts its application, Joffe declined to comment. Eskom has also been tight-lipped on reports that leaked documents reveal it is demanding annual increases of between 14.6 and 19 percent.

Eskom applied for increases of 45 percent in its MYPD2 submission for 2009 to 2012, and the Treasury recommended that this be downscaled to 35 percent.

Nersa awarded increases of roughly 31 percent annually, but this was adjusted to 16 percent in the past two years, after the government waived dividends of about R7.7 billion.

Bukula noted that this reprieve to the consumer moved back the goalposts on achieving tariff reflectivity, hence the new target of 2018.

“Ultimately, the goal is inflation- related increases, but we have to take a detour of becoming cost-reflective to cover the cost of the plants and to deal with the fact that we have old infrastructure.”

He added that in terms of taxpayers footing the bill for capital expansion, he believed “we are over the hill now and going downwards”.

Responding to a question from opposition MP Lance Greyling, Bukula said Nersa had leverage in ensuring Eskom went about expanding infrastructure in a cost-efficient way.

He confirmed that Nersa was looking into complaints about problems with the utility’s contract with Hitachi to supply boilers for its new Medupi and Kusile plants. –

Sapa


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