Eskom has welcomed a court decision allowing it to recover costs that were incurred between the 2015 to 2017 financial years following its revenue application for R67 billion for the three financial years. Photo: African News Agency (ANA) Archives
Eskom has welcomed a court decision allowing it to recover costs that were incurred between the 2015 to 2017 financial years following its revenue application for R67 billion for the three financial years. Photo: African News Agency (ANA) Archives

Eskom welcomes decision allowing it to recover costs incurred between 2015 and 2017

By Siphelele Dludla Time of article published Jun 30, 2020

Share this article:

JOHANNESBURG – Eskom has welcomed a court decision allowing it to recover costs that were incurred between the 2015 to 2017 financial years following its revenue application for R67 billion for the three financial years.

On Monday, the high court reviewed and set aside the National Energy Regulator of South Africa’s (Nersa’s) decisions to allow Eskom to recoup only R32.69bn on the regulatory clearing account (RCA) submissions for those three years.

The court said it appeared Nersa had disallowed Eskom money for lower-than-forecast revenue based on a “fundamental factual error” and irrational disallowing of some coal costs.

The RCA is a reconciliation of prudently incurred costs that are motivated in the submission. 

It allows Eskom the opportunity to achieve the initial revenue that was allowed during the revenue decision and to adjust the allowed revenue due to changes in costs that are subject to re-measurement as outlined in the Multi Year Price Determination (MYPD) Methodology.

Eskom’s application was premised on the fact that the applicable legislative framework, the MYPD methodology has not been correctly implemented by Nersa.

The judgment accepted that Eskom had put forward a proper case for relief in those key areas where Nersa did not implement its methodology and precedents. 

The areas specifically dealt with are the treatment of revenue variances, coal costs, Independent Power Producer Costs and the capital expenditure clearing account.

Eskom now said it awaited the judgment of the misappropriation of the equity injections of R69bn in the Nersa revenue decisions for the 2020 to 2022 financial years. 

In this matter, the merits of the case were not argued after Nersa acknowledged that it incorrectly deducted the equity injections provided by the government. 

“It is hoped that Nersa will undertake its mandate by ensuring that Eskom is allowed to recover its prudent and efficient costs,” Eskom said. 

“The outcomes of the judgments will aid in ensuring that Nersa corrects the current poor decisions and in future applies and abides by the rules when making determinations on Eskom’s revenue applications.”

BUSINESS REPORT

Share this article:

Related Articles