Antoinette Slabbert
2 minute read
28 May 2015
12:00 pm

Eskom price hike ‘too vague to interrogate’

Antoinette Slabbert

The Energy Intensive User Group (EIUG) will engage National Treasury and energy regulator Nersa on Eskom's application for a 25.3% tariff increase that it says "makes a mockery of the regulatory process".

FILE PICTURE: A protestor is seen singing, during a protest against the proposed tariff increase by Eskom in Midrand. Picture: Refilwe Modise

Eskom has applied for a “selective reopener” of the tariff determination for 2015-2016, 2016-2017 and 2017-2018. Nersa is considering the application and public comments until June 15. Public hearings are planned at a venue in Gauteng on June 23 and 24.

Not enough detail

Nersa hopes to make a decision on June 29 for implementation shortly thereafter. Eskom wants higher tariffs to fund its diesel and short-term power purchase programmes with independent power producers. Its own generation fleet underperforms and new generation capacity at its Medupi, Kusile and Ingula power stations is delayed.

EIUG spokesperson Shaun Nel says the Eskom application does not provide the details necessary for proper interrogation and scrutiny of the utility’s cost basis.

He says it is not correct to only look at the increased cost of diesel, without offsetting it against other savings. If Eskom’s coal-fired fleet is running at a lower-than-anticipated pace, it should be spending less on water and coal, for example, he says.

Nersa has indicated it will speedily consider the application as it is, and thereafter consider the other cost factors.

Nel, however, says the determination should be approached holistically. “These timelines do not provide enough time for the requisite prudency in considering the submissions and the application.”

Nel says the “massive increases” Eskom wants should be off-set with the money Treasury makes from Eskom’s diesel purchases through the increased fuel levy and from the increased environmental levy.

Eskom does not give any detail about the pace at which units of its three new power stations will come online, or improved performance of existing units.

Eskom spokesperson Khulu Phasiwe says the commercialisation of Medupi’s first unit will be completed next month and Kusile’s first unit in the second half of next year. Medupi’s second unit is expected in H2 2017. Subsequent units may be completed at intervals of about nine months, he said.

So, at least three units should come online within the tariff period – a total of 2 400MW.

‘Too vague’

Coenraad Bezuidenhout, chief executive of the Manufacturing Circle, agrees the Eskom application is too vague to interrogate. The Manufacturing Circle will address this, as well as the impact of further increases on its members, in a submission to Nersa.