2016/17 electricity tariff increases to remain in force despite judgement: Eskom

AUGUST 19, 2016

Despite the Nelson Mandela Bay Business Chamber's celebrated victory against Eskom and the National Energy Regulator (NERSA) in the North Gauteng High Court, the 2016/17 tariff increases will remain in force, says the power utility.

On Tuesday, the North Gauteng High Court ruled in favour of the Nelson Mandela Bay Business Chamber and four energy intensive companies based in the city of Port Elizabeth including Borbet SA, PG Group, Crown Chickens and Agni Steels SA, setting aside the regulator’s decision to grant the power utility a 9.4% tariff increase for the 2016/17 financial year.

In the application, which was heard in the North Gauteng High Court in June this year, the Chamber and the energy intensive companies asked for the R11.2 billion regulatory clearing account increase to the Eskom tariff to be declared unlawful and set aside based on numerous irregularities in the approval process.

The Chamber has declared the victory as a victory for all electricty users in South Africa.

However, Eskom maintains that the North Gauteng High Court ruling does not affect the revenue allowed for the 2016/17 year.

“As we await a decision by the National Energy Regulator of South Africa (Nersa) on the way forward regarding the North Gauteng High Court judgment, it is important to note that the court has ruled that the revenue allowed for the 2016/17 tariff will remain in force,” said Eskom.

“In paragraph 122 of the judgment, the Judge said: ‘I agree with the applicants that, even if the RCA increase is set aside, the revenue approved for the 2016/17 tariff will remain in force, as well as the direct tariff to the customers and the tariff to municipalities’.

“Eskom is still studying the court judgment and its implications on our business.”

Nersa said it was also studying and analysing the ruling.

“Once Nersa has thoroughly examined the judgment by the High Court, it will take a position on the matter, which will then be communicated in due course,” said the regulator.

SA pursuing a diversified energy mix

Meanwhile, Energy Minister Tina Joemat-Pettersson has reiterated that South Africa is pursuing a diversified energy mix that includes both independent power producers and the nuclear build.

In a statement, the Minister said the diversified energy mix is in support of government’s programme of economic growth and development.

“Again we must emphasise that there is no ‘nuclear deal’. We remain firmly committed to an above board, fair and transparent procurement process with due regard to the scale, pace and price of the programme,” she said.

The Minister said the department functions within the policy framework of government, and the programmes implemented by the Department of Energy (DoE) seek to respond to these.

“All programmes and interventions by the DoE are premised on approved government decisions as outlined in Energy Policy and the Cabinet approved Integrated Resource Plan. These include work on all energy sources such as renewable energy, coal, gas and nuclear,” she said.

Ministers and officials within departments do not operate or work outside the framework of agreed government policy.

“We further wish to reiterate that we implement programmes in compliance with the relevant guidelines and legislation, as demonstrated by our highly successfully Renewable Energy Independent Power Producer Procurement Programme.

“There will shortly be announcements on the expedited round for Renewable Energy projects as well as Requests For Proposals (RFP)  for the coal and gas IPP projects.”

The RFP, in terms of the decision of Cabinet on 9 December 2015, for the Nuclear New Build Programme will also be released in compliance with the approved Cabinet directive.

“The Ministry of Energy will not be distracted from its mandate and responsibilities to ensure and maintain security of energy supply.”

–additional reporting SAnews.gov.za