Eskom heads to court for you to pay higher tariffs to avert its own ‘collapse’

“A national crisis” is how lawyers acting for Eskom, in its case against the National Energy Regulator of South Africa (Nersa), have described the current situation at the power utility.

This after Nersa effectively refused a proposal by Eskom that would have translated to a 15% tariff increase for each of the 2019/20, 2020/21 and 2021/22 financial years. Instead, the regulator effectively approved tariff increases of only between 5.22% and 9.41%.

Eskom has now approached the High Court in Pretoria, in the hope of having a judge step in.

The matter came before Judge Jody Kollapen on Wednesday, for the first part of the case – an application for interim relief, in the form of an order permitting an effective 16.6% increase this year and effective 16.72% increase next year – to be heard.

At the heart of the matter is that, in Eskom’s view at least, Nersa’s decision to deduct government’s controversial R69 billion bailout for the state-owned enterprise from the total amount Eskom had indicated it needed for the three years in question.

Says Eskom, the bailout was geared towards getting the beleaguered power utility back on track.

In “misappropriating” these funds, Eskom chief financial officer Calib Cassim said in his founding affidavit that “NERSA unreasonably ignored the goal of government policy (both as reflected in the EPP and also in the recent statements of the President and Minister of Finance) to progress towards a position in which Eskom is able to ensure a reasonable return”.

On Wednesday, advocate Matthew Chaskalson – on behalf of Eskom – argued that if the matter was not resolved quickly his clients might then only be able to look at recovering losses at the start of the 2021/22 financial year.

“The country may have collapsed by then,” he told the court.

Nersa, on the other hand, is standing by its decision.

In the regulator’s court papers, it says that were it to have accommodated Eskom’s proposed tariffs, this would have resulted in an un affordable 53% increase in electricity prices over the course of the entire three-year period.

“The discretion exercised by NERSA is an informed one and not exercised in a vacuum, but in an economy where the increasing electricity prices are leading to the decline in sales and negative consequences for the economy,” said Nersa.

“As a consequence, Eskom is compelled to recover the increase in cost from a shrinking customer base. Naturally, this results in an application for higher tariff increases. As a result of higher tariff increases, sales further decline and the cycle starts again.”

Judgment in the matter has been reserved.

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