Nersa can’t stop increased electricity tariffs

While it was expected to make a decision by the new year, the National Energy Regulator of South Africa (Nersa) missed its own deadline to finalise a new method for determining what tariffs Eskom, municipalities and all other electricity licensed suppliers may charge – and experts say chances of Nersa saving consumers from high increased electricity tariffs are low.

Nersa’s head of electricity regulation Nhlanhla Gumede said the method would only be finalised early next year, due to delays in the appointment of technical specialists and drafters.

Gumede said the initial June deadline was extended to 30 September and those appointments, among other things, delayed the process, this after Eskom went to court to block premature implementation of the proposed new methodology.

Energy specialist Lungile Mashele said Nersa missing the deadline had no impact on consumers, apart from the normal tariff increase.

“But the proposed changes in tariff methodology when the methodology is implemented eventually will have a drastic impact on electricity tariffs for residential and commercial users,” she said.

Eskom spokesperson Sikonathi Mantshantsha said the current application was made in accordance with the current price methodology.

It was understood Eskom planned to apply for a whopping 32% tariff increase from 1 April next year.

“Any price changes on this application are only due for implementation on 1 April, 2023, and Nersa must make the decision before end of December,” he said.

“Any change in methodology is for application only on subsequent periods and will have no negative impact on business.”

The saga emerged last year when Nersa rejected Eskom’s tariff application for the 2022-23 to 2024-25 period and claimed it was prepared using the 2016 methodology, which Nersa believed had expired.

Eskom, however, disputed the methodology remained valid until replaced by another lawfully developed and accepted methodology and the court ruled in Eskom’s favour and ordered Nersa to determine the tariffs for the first of the three years following the existing 2016 methodology.

The court determined “if Nersa published a new pricing determination methodology and reviews all other related regulatory requirements for the industry by 30 September, Eskom shall submit a revised 2024-25 revenue application by no later than 1 June, 2023 to Nersa for consideration and approval by 20 December, 2023”.

While there were major concerns around the rush to finalise the new methodology, Gumede said there was no time to waste to finalise the new methodology as the current one was no longer appropriate.

Minerals Council technology analyst Christian Teffo advised Nersa to stop its “unwise” and rushed overhaul.

Teffo said Nersa was not ready for implementation and it was unfair to expect stakeholders to accept an incomplete methodology without knowing what the impact will be. The Energy Intensive User Group was concerned about the impact the new methodology could have on users.

ALSO READ: Nersa misses deadline for new electricity tariff methodology

– lungas@citizen.co.za