Salga complains that municipalities lose out by not being able to apply levies and surcharges on sales of electricity by Eskom to its own customers. Picture: iStock
South Africa needs more time to comment on electricity supply costs proposed by the National Energy Regulator (Nersa), as well as greater transparency on electricity supply costs. More expert comment will also ensure that these rules are fair, appropriate and encourage economic growth.
Nersa published a Consultation Paper to Determine a New Price Determination Methodology on 30 September, giving stakeholders only 22 days to comment on revising the existing Multi-Year Price Determination (MYPD) methodology used to set the electricity prices.
At the same time, Nersa rejected Eskom’s pricing application for 2022/23, saying this application must be made under the as-yet-to-be-finalised new methodology although Eskom submitted the price application four months before the Nersa publication. Eskom is now challenging Nersa’s rejection in court.
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Public watchdog Outa has now warned Nersa not to rush these crucial pricing rules.
“South Africa needs a better method of setting electricity prices, but this needs a more thoughtful and longer public consultation process,” Wayne Duvenage, CEO of Outa, says.
Outa made a formal submission to Nersa on the pricing review, saying it is pleased that the regulator has acknowledged that change is needed regarding the methodologies behind our country’s determination of electricity prices.
However, Outa warned that a hasty approach for the mere sake of consulting the public will simply not cut it. There is no silver bullet to solve our electricity issues.
“The methodologies are very complex and must not simply look good on paper. If Nersa gets this crucial approach wrong, the economic consequences will be felt across all spheres of society from industries to homes.”
Outa wants a more precise public consultation process, as well as greater transparency regarding the issues and costs of electricity with technical input from energy experts and industry stakeholders.
“Nersa may be the national regulator, but it cannot take on this mammoth task on its own. We recommend that the consultation process be slowed down to allow for meaningful public participation.”
According to Duvenage, Outa believes that industry stakeholders, experts and civil society should assist Nersa to reach a revised methodology and a national solution to the electricity price.
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Outa’s submission includes concerns about:
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“Civil society has seen the fallout of state capture and an energy policy that is stuck, as well as unfounded investment in fossil fuel, with little regard to the changing international environment. An alternative system would have to put the customers’ needs first, rather than balance reasonable profits versus electricity service.
“Electricity is supposed to be a driver or enabler for economic development and not a means of extracting profits from a captive audience. The restructuring and unbundling of Eskom and the setting up of the Independent System and Market Operator (ISMO) would hopefully assist with this,” Duvenage says.
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