Eskom public hearings for tariff hike commence

The National Energy Regulator (NERSA) will be holding public hearings this week, starting on Monday 18 January, for the 16.6% tariff increase that Eskom has applied for. The application for the higher tariff increase came in November 2015, following a failed attempt by Eskom to get the higher tariff increase implemented earlier in 2015. A 12.69% has previously been approved by NERSA.

In a statement released by Eskom in November when it submitted the application, it noted: “Eskom has applied to the National Energy Regulator of South Africa (NERSA) for the evaluation and approval of the regulatory clearing account (RCA) balance for the first year (2013/14 period) of the third multi-year price determination (MYPD3) amounting to R22.8bn.

“The MYPD methodology requires Eskom, after financial year end, to submit its RCA application to NERSA based on audited financial statements. NERSA’s regulatory rules (MYPD Methodology) allows Eskom to adjust for the over or under recovery of preceding years’ regulated costs and revenues through the electricity tariffs in subsequent years.”

In a statement released by NERSA following the application, it explained: “The RCA is a depository for qualifying variances between the revenue and expenditure approved for Eskom in the MYPD3 determination and its actual revenue and expenditure. The RCA is necessitated by the fact that the revenue and expenditure approved for Eskom is largely based on forecasts. The MYPD Rules require that from time to time a reconciliation of these variances be done in order to quantify over/under collection of revenue and over/under-expenditure on Eskom’s part. The Energy Regulator allows only expenditure that has passed the efficiency test.

“Should the results of the assessment indicate that Eskom has to reimburse the customers, the price of electricity would have to decrease proportionally to the RCA balance. Similarly if the customers have to reimburse Eskom, the price would have to increase.”

Past attempts
In June of last year (2015), NERSA held public hearings on another application calling for a 25.3% tariff increase for 2015/2016 by Eskom.

However, following several days of presentations by both those for and against the increase, it was found that the documentation submitted by Eskom for the increase did not contain all up-to-date information, and therefore the information could not be accurately accessed. At the time, one of the experts who spoke out against the tariff increase, noted that it appeared as though acting Eskom CEO Brian Molefe was not properly prepared, being shocked by some of the information provided to NERSA by Eskom.

The current hearings will take place from 18 January to 5 February 2016, in a number of locations, starting in the Western Cape, and then moving on to the Eastern Cape, Kwa-Zulu Natal, the North West Province, the Northern Cape, the Free State, Mpumalanga, Limpopo, and ending in Gauteng.