Nersa and Eskom heading to court over multi-year tariff increases

The National Energy Regulator of South Africa (NERSA) and Eskom are seemingly at loggerheads over the latter’s push for a multi-year tariff application, commonly referred to as MYPD 5.

Eskom initially had its application rejected by Nersa at the end of September, but now the power utility has applied to the High Court for the application to be reconsidered.

Nersa outlined the position it was in with an official media statement (PDF) earlier in the week, noting that Eskom says the move is the only option that the power utlity can take.

“Regrettably, this is the only available option to avoid extremely serious and negative consequences for Eskom and by necessary consequence, to National Treasury. The urgent High Court review requires NERSA to urgently process the Eskom revenue application for at least one year, as required by law,” said the embattled government entity.

“The proposed timeframe allows for a decision to be made in time for implementation by 1 April 2022,” it added.

That’s right, should the High Court compel Nersa to push through the application, the multi-year tariff increase would come into effect on April Fool’s next year, which smacks of being the opposite of poetic justice.

Along with the rejection in September, Nersa added a consultation paper to highlight the necessary principles it deemed fir when applying for increases.

“The new price determination approach will also take into consideration the rapid transformation of South Africa’s electricity sector, respond to the transformation of the Electricity Industry and associated energy security concerns, rising electricity prices as well as the increase in self and private sector electricity generation,” the consultation paper explained.

According to Eskom though, the principles are untenable.

“NERSA… requires Eskom to make a new application based on a methodology yet to be developed. This is impossible both from a legal process and timing point of view. It is hoped that NERSA will respond in a manner that allows for the stability of the country’s economy and the electricity industry,” it noted in a press statement.

It remains to be seen what the High Court decision will be once both parties make their cases, but the result could see South Africans continue to pay a failing power utility which continues to underperform and remain a drain on the country’s coffers.

[Image – Photo by Nikola Johnny Mirkovic on Unsplash]


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