Business In The News South Africa

Eskom disappointed by Nersa refusing it a 19.9 percent tariff hike

 CAPE TOWN, December 15 – Eskom on Friday expressed disappointment at a decision by the National Energy Regulator of South Africa (Nersa) to deny it a 19.9 percent electricity tariff hike for the 2018/19 financial year.
Instead, Nersa announced it would grant Eskom a 5.2 percent electricity price hike from April 1 next year until March 31 in 2019.
“Eskom will await the Regulator’s reasons for decision document for the 2018/19 allowed revenue in terms of the MYPD [multi-year price determination] methodology,” Eskom said in a statement.
“This will provide insight into how this allowed revenue decision was made. The reasons for decision document will enable Eskom to make an assessment on the impact to the business and then make a decision on the way forward.”
Nersa chairman Jacob Modise earlier on Friday afternoon, announced that it would soon publish a document with full reasons for the price hike.
“In making its decision, the Energy Regulator has considered the public interest and the inputs received from stakeholders,” Nersa chairperson Jacob Modise said in a statement.
“It is important to indicate that the National Energy Regulator Act enjoins the Energy Regulator with the requirement that its decisions must be in the public interest. In addition, the Electricity Regulation Act has embodied the regulatory framework, which necessitate a fair balance between the interests of customers and end users, and those of licensees and investors in the electricity industry.”
Eskom had applied to collect revenue of R219.5 billion based on “eight broad categories”, Modise said. The categories included operating expenditure, buying from independent power producers, demand management and a return on assets.
Nersa said after publishing Eskom’s application on its website in September, 23,000 written comments were received. 
“The Energy Regulator conducted public hearings in eight provinces of South Africa from 30 October to 22 November 2017. The public hearings afforded interested and affected stakeholders the opportunity to submit their views, facts and evidence. A total of 96 oral presentations were made.”
Some of the arguments against Eskom’s application included that the demand for electricity was not expected to increase and that it was ” inconceivable that consumers have to pay for a return on assets on work under construction and completed, as well as the depreciation of the very same assets”. 
“They are excessive. Eskom must reconcile the two and the difference should form part of the tariff as a reduction or an increase,” a comment from members of the public said.



The National Energy Regulator of South Africa (Nersa) will on Friday announce its decision on power utility Eskom’s application for tariff increases for the 2018/19 financial year.

Nersa held public hearings in the Gauteng and Western Cape provinces between October 30 and November 20 on Eskom’s request to increase tariffs by 19.9 percent for direct customers from April 1 next year and an average of 27.5 percent for municipal customers from July 1.

Earlier this year, Nersa granted Eskom a below-inflation 2.2 percent increase for 2017/18.

Lobby groups such as the National Black Consumer Council (NBCC) and the Organisation Undoing Tax Abuse (Outa) have urged the regulator to turn down Eskom’s proposed tariff hikes for next year.
African News Agency (ANA),

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