Expect to pay more for electricity after Eskom wins court ruling

South Africans consumers and businesses are set to pay more for electricity after the South Gauteng High Court ruled in favour of Eskom in its case against the National Energy Regulator (Nersa).

The decision focused on the multi-year price determination (MYPD), with the court ruling that Nersa unlawfully included a R69 billion equity injection from the government in its calculation of Eskom’s allowable revenue for 2019 to 2022.

The court confirmed that Eskom could recover R69 billion in a phased manner over a three-year period.

Eskom has previously indicated that this amount would be recouped through electricity price hikes, which it will now be able to apply for as a result of this judgement.

The power utility welcomed the decision, which it said, will enable it to become more self-sufficient, recover costs, and reduce its dependence on government.

BusinessDay reported that the price hikes could add as much as 10% to the cost of electricity in South Africa, with some analysts indicating that the increase could be even higher.

However, Eskom told MyBroadband that reports claiming it wanted to increase prices by 15% next year were correct. Any price adjustments will likely be from 1 April 2021 onwards, it said.

The utility said the correction of the unlawful and poor decisions made by NERSA will assist Eskom to return to financial sustainability.

“Prior to the court hearing, NERSA was in agreement that the deduction of the equity injection was not correct in terms of its MYPD methodology,” Eskom said in a statement regarding the judgement delivered today.

“The judge was required only to make a decision on the recovery of equity.”

Debt

Eskom’s gross debt has swelled to R480 billion, after the state-owned power utility borrowed from its lines of credit, documents seen by Bloomberg show.

The increase, from a previously disclosed level of R454 billion, comes as the company struggles to meet running costs, including a debt-service bill, despite a government bailout. Inadequate maintenance of its ageing power plants has also led to rolling nationwide blackouts again.

Over the past year, Eskom clinched a R15 billion syndicated loan with commercial banks, a R7 billion loan from the China Development Bank and a R5 billion facility from South Africa’s Public Investment Corp, the documents show.


Read: Eskom warns of load shedding this week as it reminds poor households to claim free basic electricity

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Expect to pay more for electricity after Eskom wins court ruling