High court gives Eskom another chance to hike electricity tariffs
JOHANNESBURG - Power utility Eskom has been given a chance to file a new application to hike electricity tariffs significantly, a move that could further deplete the pockets of struggling consumers amid a recession-hit economy.
The North Gauteng High Court in Pretoria yesterday set aside the decision by the National Energy Regulator of SA (Nersa) on 2018/19 tariff increases.
The court also grante d Eskom leave to apply to Nersa for additional expenses the utility incurred for the year in dispute. High Court Judge Jody Kollapen said Nersa had made errors in its determination of Eskom’s allowable revenue for the 2018/19 financial year.
He found that Nersa deducted billions of rand from Eskom’s projected revenue due to how it calculated the utility’s coal and employee costs.
Kollapen also said that the regulator should have consulted Eskom on deviations of the Multi-Year Price Determination (MYPD) methodology. Eskom’s additional revenue was intended to compensate for revenue shortfalls and cost overruns of about R27.3 billion during the 2018/19 financial year. “Nersa should have advised Eskom of an intention to depart from MYPD methodology and of an alternate to be followed to give it an opportunity to give input on departure and the alternate. To divert unilaterally is unfair,” Kollapen said.
“Eskom is granted leave to apply to Nersa within 60 days of this court order or the final 2018/2019 regulatory clearing account decision, whichever is the later, to make a supplementary tariff determination granting Eskom any additional amounts which it has expended in the 2018/2019 tariff year.” Nersa spokesperson Charles Hlebela said the regulator was still studying the court decision before announcing its next course of action, in a statement today.
Eskom’s spokesperson, Sikonathi Mantshantsha, could not be reached for comment yesterday. The cash-strapped power utility last year applied for an electricity price increase of 18.9 percent, or about R219.5bn, of its revenue requirement. Nersa approved only R190.3bn, or about 5.23 percent of the allowable revenue. Nersa had said that Eskom’s efficient revenue should have been recovered over a volume of sales, but Eskom said that was not possible as sales were declining due to a combination of reasons. Meanwhile, the struggling power utility ramped up its rotational load shedding from Stage 1 to Stage 4 yesterday afternoon after Koeberg Unit 1 tripped.
Eskom’s ageing fleet is constrained, unpredictable and vulnerable, and has plunged the economy into a recession as companies have to scale down on production during power cuts. Eskom said that the Koeberg unit had been disconnected from the grid due to a fault on the turbine side, but the nuclear reactor remained safe. “The teams are investigating the root causes of the fault, and will advise of the remedy as soon as it is established,” it said. “The loss of the approximately 930MW unit puts further strain on the generation fleet, necessitating an increase in the stage of load shedding.”