File image: Eskom. IOL.
JOHANNESBURG - The Congress of South African  Trade Unions yesterday  urged the National Energy  Regulator of South Africa  (Nersa) to reject Eskom’s application  to recoup R66 billion,  saying such a move was unaffordable,  unreasonable and  unjustifiable. 

If the Regulatory Clearing  Account (RCA) application  – which covers the 2014/15,  2015/16 and 2016/17 financial  years – is approved, Eskom  would claw back the billions  of rand through higher tariffs. 

According to various organisations,  the R66bn could lead to a  30 percent increase in tariffs. 

Public hearings 

The RCA is a backward-looking  mechanism that seeks to  reconcile what Nersa awarded  Eskom on the basis of what  was forecast in the Multi-Year  Price Determination (MYPD)  and what materialised, as reflected  in the utility’s financial  statements. 

In a presentation at Nersa’s  public hearings on the application  in Cape Town yesterday,  Cosatu said higher tariffs  were not the solution to Eskom’s  problems. It said higher  tariffs affected key sectors  such as mining, inflation and  economic competitiveness. It  said Eskom had failed to come  clean on state capture and to  take serious action against  maladministration and corruption. 

The trade union federation  said Eskom should institute  comprehensive forensic and  criminal investigation “with  dismissals, arrests, asset seizures  and prosecutions”. 

Speaking at the hearing,  Eskom interim chief executive  Phakamani Hadebe said  Eskom’s sustainability depended  on a sound regulatory  environment that was aligned  with existing Nersa rules and  other legislative requirements. 

“We therefore rely on Nersa to  review our application in line  with the MYPD3 methodology,  which is a globally accepted  regulatory principle that reconciles  variances between the
projected and actual revenue  and costs that Eskom incurred  for certain elements.  “It is also worth noting that  we based our application on  the decision already taken by  Nersa on our first RCA application  for 2013/14. 

“We have spent the money  in the implementation of our  mandate of providing electricity  to South Africans by raising  debt as it was not included  in the revenue decision and  need to repay those loans accordingly  in order to ensure  credibility with our lenders.” 

Hadebe said Eskom’s application  only covered costs that  were incurred efficiently and  prudently. 

Recovery 

He said Eskom was on a path  of recovery on governance.  The Eskom board – appointed  in January – was preoccupied  with the power utility’s operational  and financial stability.  “Continued focus and effort  will be placed in combating  corruption and pursuing  justice within the legal  framework. We also welcome  various investigative interventions  that are under way to  get to the bottom of recent  acts of fraud and corruption,  and we are in the process of  claiming back money owing  to Eskom, including money  that was fraudulently paid to  McKinsey and Trillian,” said  Hadebe. 

Agri Western Cape said  electricity costs had risen significantly  since 2008. The federation  of farming organisations  said Eskom’s RCA should  be vetted by auditors.

- BUSINESS REPORT