Energy expert and partner at Mining and Energy Advisors and the Energy Expert Coalition, Ted Blom, slammed Eskom during National Energy Regulator of South Africa (Nersa) hearings held in Soweto last week.
The hearing was prompted by Eskom’s attempt to recover R66 billion after variances in coal usage, revenue, independent power producers and other costs. Eskom is able to apply for a tariff increase to recuperate these costs, but this increase must be applied for and overseen by Nersa.
During the hearings Blom highlighted corruption and questionable spending at Eskom which Nersa forced Eskom to address during the hearing.
“This has been a 10-year fight where Eskom have resisted at every step. I am pleased to say Nersa forced Eskom’s hand on Friday by demanding the issue be addressed in closing comments,” Blom said in a media statement.
The energy provider reluctantly admitted that corruption might have had a hand in the proposed tariff increase. The firm added that it would approach Nersa for a reduction in tariffs once investigations into the proposed increase in tariffs had been completed.
“While this is a major victory towards lower tariffs, there are still plenty battles to close,” says Blom, “we are heading towards a battle in the courts and are going to need the public behind us”.
Meanwhile, City Power pointed out possible inefficiencies at Eskom that may have led to higher coal costs and as a result, an application for higher tariffs. City Power manager of pricing and tariffs Frank Hinda questioned why Eskom spent more money on coal when it was burning less of it.
“In the interest of prudence simply because Eskom burnt less coal. They should have spent less money instead of more,” Hinda was quoted as saying by IOL.
The City Power manager says that R19 billion should be taken out of Eskom’s application as a result of these inefficiencies.
Eskom is arguing that, as the energy supplier to South Africa, it had to keep the lights on. This led to higher than usual expenditure.
Final hearings are expected to commence today.
[Image – CC BY SA 2.0 Chris Hunkeler]