Eskom, NERSA studying Business Chamber's court victory against tariff increases

AUGUST 18, 2016

Eskom is to await a decision by the National Energy Regulator of SA (Nersa) on the way forward following a court decision on Tuesday to set aside the regulator’s decision to grant the power utility a tariff increase.

This is after the Nelson Mandela Bay Business Chamber, together with local energy intensive industrial companies, brought an application before the North Gauteng High Court asking that 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.

In March, Nersa granted the power utility a 9.4% tariff increase for the 2016/17 financial year. This increase became effective from 1 April and applied to Eskom’s direct customers. Tariffs for municipal customers were effective from July 1.

The tariff increase was granted after Eskom submitted its RCA application for the first year of the Third Multi-Year Price Determination (MYPD3).

At the time of its decision, Nersa said the RCA balance of R11.2 billion is recoverable from standard tariff customers, local Special Pricing Agreements (SPAs) and international customers. It also decided that the amount of R10.2 billion is recoverable from standard tariff customers for the 2016/17 financial year only.

In a short response on Wednesday, Eskom said that it "...notes the judgment by the Gauteng High Court on the (Regulatory Clearing Account (RCA) and will await a decision on the way forward by the National Energy Regulator of South Africa."

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.

–additional reporting