Eskom increases electricity tariff

The National Energy Regulator of South Africa (Nersa) has announced that it would not grant Eskom the R22,8-b variance it had requested for the costs incurred in the production of electricity in the 2013/14 financial year.

It has instead approved an amount of R11,2-million, which amounts to a 9,4% tariff increase for the 2016/17 financial year.

Group chief executive of Eskom, Brian Molefe says, “Eskom has noted Nersa’s decision, which yet again doesn’t address the question of Eskom’s continued financial sustainability and in addition, it will have operational consequences.

“We note Nersa’s decision and will study the details contained in the reason for decision document once received before commenting on its implication.”

Molefe says that Eskom understands the implementation of the regulatory rules in Nersa’s regulatory clearing account (RCA) balance decision and that the revenue variance and certain primary energy costs, which include independent power producers, are supported.

“We note with concern the decision on open cycle gas turbines (OCGTs), which will guide Eskom’s operations in the future in terms of balancing the energy supply and demand in a bid to avoid load shedding.

“We have reduced diesel usage in recent months and have made great strides in our maintenance plan. However, we continue to run a constrained grid. OCGTs are part of our emergency portfolio and have been used in the past to avoid or limit load shedding with the understanding that we can recover these costs within the RCA process.

“The recovery of diesel costs is now seriously in question with Nersa’s current decision.

“We will do our best to minimise the risk of load shedding, striking a balance with Eskom’s already depleted balance sheet,” says Molefe.

In terms of the Municipal Finance Management Act (MFMA), the Minister of Public Enterprises, Lynne Brown, will table the municipal increases in Parliament on or before March 15.