Nersa approves R32.7 billion tariff clawback for Eskom

The National Energy Regulator of South Africa (Nersa) has granted Eskom’s R32.69 billion application to clawback funds from the 2014/15 – 2016/17 financial years.

Eskom had brought three regulatory clearing account (RCA) applications since 2016 which asked for a total of R66.69 billion to cover reduced revenue and increased costs for 2014/15 to 2016/17.

The successful RCA application means that in addition to the annual price increase for the year ahead, Eskom may be allowed to charge customers for extra costs or to make up reduced revenue.

Nersa said that the could be recovered from stnadard tariff customers, local Special Pricing Agreements (SPAs) and international customers.

Nersa set the annual price increase in December last year, approving a total allowable revenue for Eskom of R190.348 billion for 2018/19, resulting in an increase in the average price of electricity of 5.23% from April 2018. The average price of Eskom electricity is now 93.79c/kWh excluding VAT.

“As part of the annual price increase, Eskom’s price to municipalities for bulk purchases increases by 7.32%. In turn, the municipalities may increase prices by an average of 6.84%, from July 2018,” explained civil society group,Outa.

It added that Nersa’s decision was akin to ‘rewarding the rampant corruption of recent years at Eskom’.

“The Electricity Regulation Act makes provision for NERSA to enable an efficient utility to earn a return on investment, however, Eskom is grossly inefficient and does not deserve this recovery which NERSA granted,” says Ronald Chauke, OUTA’s Energy Portfolio Manager.

“This approval makes electricity consumers pay for the gross mismanagement at Eskom.

“Eskom is in a cash flow crunch. The best remedy would be for the National Treasury to provide a bailout with stringent conditions attached, rather than passing on these costs to electricity users.

“Increasing the price of electricity will increase the cost of living and the cost of doing business, which imposes a further burden on our ailing economy which is failing to create the much-needed jobs.”