Outa has once again called for the scrapping of the Regulatory Clearing Account (RCA) pricing process, which allows Eskom to get the National Energy Regulator (Nersa) to approve price increases to cover historical losses.
Outa made the submission to Nersa as part of the public participation process on Eskom’s RCA application for 2020/21, which the regulator is currently considering.
Eskom has asked Nersa for R10.72 billion in additional revenue for 2020/21, which would be added to future electricity prices.
“The current overall methodology allows Eskom to regain revenue lost due to lower demand for electricity and lower economic growth,” said Outa in a statement.
“These trends are likely to continue, leading to a cycle of decreasing electricity sales and increasing electricity tariffs.”
Outa is firm on the need to review the methodology because in the current state, there is no incentive for Eskom to apply its mind to solving the problem.
“It can always rely on the RCA to bail it out,” said Outa Parliamentary and Energy Advisor Liz McDaid.
This system adds to the economic uncertainty in South Africa.
Outa wants the regulator to stop awarding Eskom further increases in electricity tariffs, saying the entire RCA mechanism should be reviewed and potentially scrapped.
“This would ensure increased certainty and consistency in the price path of future electricity tariffs,” said McDaid.
Outa is also concerned that Eskom’s application cites the lower electricity sales due to Covid-19, but it still had to load shed and overspent on expensive diesel generators.
Eskom has said it would not pass through the costs of Covid-19 and load shedding to consumers, but Outa is not certain that the methodology Eskom uses to calculate these costs covers the extent of the expenditure.
“Nersa should therefore be cautious in granting any RCA-related increases,” says McDaid.
Eskom and Nersa have clashed over previous RCA applications, with Eskom successfully challenging the regulator’s decisions for 2015, 2016 and 2017 in court.
It’s currently challenging the 2018 and 2019 decisions. The 2020 RCA application was submitted more than a year ago and a decision is still awaited.
Compiled by Narissa Subramoney
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