Cape Town - The National Energy Regulator of South Africa (Nersa) has filed court papers in response to those of Eskom which called for the high court to review and set aside the regulator's decision to limit its revenue from electricity tariffs for the period 2019/20 to 2021/22.
In court papers filed by Nersa’s full-time regulator member, Nomfundo Maseti, she points out that the embattled power utility's incompetence and maladministration have resulted in the public forking out more money.
“In doing so, it became apparent that the inclusion of the R23billion equity injection would lead to a 53% tariff increase, which would have been unaffordable to the public and unsustainable to the economy,” Maseti said.
The urgent application relates to the R69bn bailout that the government gave Eskom. The national energy regulator deducted this amount from Eskom’s approved revenue for the current tariff period, which ends in March 2022.
“In a country such as South Africa, with significant problems of unemployment, inequality and poverty, it is important to assess the impact of such revenue applications on macroeconomic indicators,” Maseti said.
Eskom is reportedly challenging five tariff decisions made by Nersa in three separate court cases.
If Eskom wins this application, the price of electricity will rise from the 8.1% increase approved by Nersa for this year to 16% and the 5.22% increase for next year.
Maseti said Nersa found out about the R69 billion bail out when it was announced in Parliament. This despite a legal obligation from Eskom to declare “all relevant information” to Nersa.
Eskom’s chief financial officer Calib Cassim said in his founding affidavit, “In making its decision, Nersa impermissibly and irrationally deducted from the allowed revenue what it understood to be 'equity injections' from Eskom’s shareholder (i.e, the state) of R23bn for each of the financial years covered by Eskom’s application.”
Cassim admitted that the power utility is in a very precarious position.
“Over the last ten years, the dire implications of this historical position began to be felt because Eskom has had to embark on an ambitious build program with the construction of 3 large-scale power stations and the upgrading of its transmission network. Eskom’s balance sheet weakened over this period owing to prices, approved by Nersa, which did not cover its prudent and efficient costs,” he said.