South Africa 19.1.2016 09:00 am

Eskom wants another R23 billion

Picture: Michel Bega

Picture: Michel Bega

“From a financial sustainability perspective it goes without saying that an organisation cannot save its way out”.

Through a special application to the National Energy Regulator SA, Eskom has appealed for almost R23 billion from taxpayers to recoup money it overspent in the 2013/2014 financial year.

During the first day of public hearings in Cape Town yesterday [Monday] Eskom’s Chief Financial Officer Anoj Singh said the power utility was “entitled” to the R22.8 billion overspent.

“From an economy perspective we have generated electricity and we have incurred costs. From a financial sustainability perspective it goes without saying that an organisation cannot save its way out,” he said.

The amount asked for through the Regulatory clearing Account (RCA) meant an additional 8% to already scheduled 8% yearly increase on the current tariff structure already agreed to in the Multi Year Price Determination (MYPD) in 2013 up to 2018.

This may mean that if acceded to the cost of electricity will be just under 17% more than last year.

The R22.8 billion includes R11.7bn for revenue variance, R8bn for open cycle gas turbine (OCGT) costs, R2.4bn for other primary energy costs, R2bn for coal burn and R1.7bn for independent power producer extra purchases.

There was also a revenue shortfall.

This was attributed in part to more consumers switching to OCGT (diesel) for alternative electricity supply as a result of load-shedding and outages.

Leslie Rencontre, the director of electricity services, said the bulk of the R22.8bn adjustment was made up of reduced revenues of R11.7bn and increased primary energy costs of R14.4bn.

“If Eskom are granted the full R22.8bn adjustment, it will mean an additional 8.6% increase in Eskom tariffs over and above the already approved MYPD… increase of 8%. This will mean all Cities will face at least a 16% Eskom increase in July 2016.

The Eskom increase would need to be passed onto City customers through increased City electricity tariffs from 1 July.

“Electricity prices are already high for business and residential consumers including the poor. Any additional increase approved by NERSA will have a further negative impact on Cape Town’s economy and all its customers,” he said.

Rencontre said the city of Cape Town’s electricity sales were 22% less than in 2006/7 than the projected reduction.

He predicted that as tariff prices increased and consumers could not pay there would be an increase in electricity theft.

SA Local Government Association (Salga) said it did not make sense to reward a parastatal for doing the job it was paid to do.

Happy Khambule from Project 90 by 2030 said the RCA application, if approved, would mean consumers would be double charged.

Following public hearings in Midrand in early February, Nersa is due to announce its decision on 22 February.

 

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