The song and dance between the National Energy Regulator of South Africa (Nersa) and power utility Eskom over tariffs beginning in April next year is very much on, with legal salvoes from both sides over what is expected to be an established process only mediated by the courts. Photographer: Dean Hutton/Bloomberg
The song and dance between the National Energy Regulator of South Africa (Nersa) and power utility Eskom over tariffs beginning in April next year is very much on, with legal salvoes from both sides over what is expected to be an established process only mediated by the courts. Photographer: Dean Hutton/Bloomberg

Nersa and Eskom fire legal salvoes in tariff stand-off; delays could hurt the power producer

By Banele Ginindza Time of article published Oct 20, 2021

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THE SONG AND dance between the National Energy Regulator of South Africa (Nersa) and power utility Eskom over tariffs beginning in April next year is very much on, with legal salvoes from both sides over what is expected to be an established process only mediated by the courts.

Eskom over the weekend declared war on Nersa and approached the courts on an urgent basis after the rejection of its multi-year price determination 5 (MYPD5) application covering the 2022/23, 2023/24 and 2024/25 periods, while Nersa changed horses midstream in terms of the application process, which means Eskom has no tariff structure for April next year until the court says so.

Nersa responded late on Monday with a statement on Eskom’s salvo, saying that it was reviewing the application and would resolve the matter in the legal time frame.

This concerns Eskom as adapting to the new application process might take longer, jeopardising its financial status through delays.

“If there is no price change, whether an increase or a decrease, Eskom cannot sell electricity. There is no price change if Nersa does not change the tariff structure. The issue now is that Nersa did not inform Eskom on the methodology.

“They have not answered the question of what they are changing,” Eskom spokesperson Sikonathi Mantshantsha told Business Report yesterday.

“Like other stakeholders – including you and me as consumers, the government and the general public – we had to have an input in the change of the application methodology or formula.

“Eskom had to make an input into the new methodology. Nersa changed.

So now we have to go to court because that is the only way it has to be resolved,” Mantshantsha said.

In a terse statement, Nersa, which did not succinctly clarify whether it would review its decision independently or if its response would be addressed to the courts, said it was reviewing the application.

“Nersa is studying the application and will advise whether it will be opposing the judicial review application within the required time frame and process,” said Nersa’s head of communications, Charles Hlebela.

Eskom said last month that Nersa’s rejection of its MYPD5 application created a regulatory vacuum for the electricity supply industry in South Africa and that, even if the new methodology was developed in time, Eskom would not be able to make a new price application for implementation by April 1, 2022, until full statutory compliance, due process and legislative consultation had been fulfilled.

Eskom now wants to press for a determination on the 2022 application process for continuity, while it normally applies for a three to five-year determination to cut the red tape while applying for the longer-term decision.

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BUSINESS REPORT

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