Nersa slams Eskom for missing cheaper alternatives

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Pretoria – The National Energy Regulator of South Africa (Nersa) on Tuesday slammed Eskom for missing cheaper options to keep the lights on and only granted the national power utility half of its R22.7 billion Regulatory Clearing Account (RCA) request.

The energy regulator granted Eskom the RCA balance of R11.2 billion to be recovered for the financial year 2016/17 only. Of this amount, about R10 billion will be recovered from standard tariff customers and R983 million from local Special Pricing Agreements (SPA) and international customers.

Nersa’s decision will mean that the average tariff increase for Eskom’ standard tariff customers will be 9.4% for the financial year 2016/17, likely from beginning of April this year.

When handing down the regulator’s decision on the power supplier’s RCA application, Nersa chairperson, Jacob Modise slammed Eskom’s bid to have its customers pay for its own errors and improper planning, saying this was unfair to the consumer.

“It is a concern that more than 70% of Eskom’s R22.8 billion RCA is made up of primary energy requirements and a large chunk being the usage of Open Cycle Gas Turbines (OCGTs), which should be a supply of last resort,” said Modise.

“Eskom may be justified in the use of gas turbines due to the country’s capacity constraints, but the manner in which it reached that stage is concerning, because maintenance of the cheaper options of generation fleet was not well executed and properly planned. This error must now be paid for by the customers and it is unfair.”

Energy expert Chris Yelland, a managing director at ee Publishers, said Nersa’s decision to grant Eskom half of what they asked for, should be a relief to electricity users in the country as it could have been worse than it was, whilst Eskom might be disappointed as they did not get what they applied for.

However, Modise warned electricity users to use it wisely so that the about 10% tariff increase did not affect them too much.

Meanwhile, in terms of sales, Eskom applied for an RCA balance of R11.7 billion and the energy regulator allowed R6.2 billion, saying Eskom did not disaggregate the Special Pricing Agreements and International Sales when allocating the approved Multi-Year Price Determination (MYPD3) revenues to different customer categories.

The power supplier was dealt a huge blow on the OCGTs R8 billion RCA application where only R1.2 billion recovery was allowed.

In November 2015, Nersa published Eskom’s RCA application on its website and stakeholders were invited to submit written comments and some 18 written comments were received from various individuals, small users, intensive users, government departments and trade unions. Public hearings were also conducted in six provinces between January and February this year.

African News Agency

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