Nersa to decide early 2016 on possible Eskom tariff hike

Siseko Njobeni

Johannesburg - Monday was the last day for interested parties and the public to comment on Eskom’s request for the National Energy Regulator of South Africa (Nersa) to allow the electricity utility to recover an additional R22.8bn.

Nersa approves electricity tariff increases for Eskom based on a number of assumptions on factors such as electricity demand and cost of primary energy. Depending on how those assumptions pan out, Eskom is either owed money or owes the public.

The methodology used to determine Eskom’s tariffs allows the utility, after the financial year-end, to submit its so-called Regulatory Clearing Account application based on the financial statements. This is meant to reconcile the assumptions and projections used to determine the tariffs and the actual revenue costs incurred.

Eskom submitted an application for the 2013/14 financial year in November. An approval of the application could result in future tariff hikes. Eskom last week said an approval of the application would improve its ability to meet financial commitments and enhance its balance sheet.

Eskom on Monday said Nersa will hold public hearings on the application from January 19 to February 4. “A decision on the application is then due on 25 February 2016,” Eskom said.

In its application to Nersa, Eskom wants to recoup, among others, R11.7bn for a shortfall in revenue, R8bn in costs associated with the utility’s peaking open cycle gas turbine (OCGT) plants and R2.4bn for primary energy costs.

Eskom said the shortfall in revenue was primarily due to lower than anticipated electricity demand. The power utility said it had not included any revenue lost because of loadshedding in 2013/14.