NERSA tariff hearings: Nelson Mandela Bay Business Chamber makes authoritative voice heard

JANUARY 20, 2016

Delivering one of the strongest presentations of the week, the Nelson Mandela Bay Business Chamber lived up to its slogan of being the authoritative voice of business when it presented today at the Nersa public hearings in the city.

The hearing on whether Nersa should approve Eskom's Regulatory Clearing Account (RCA) application of R22.8-billion for the five year multi-year price determination (MYPD) Year 1 (2013/14) took place at the ETC Conference Centre in Struandale.

The Nelson Mandela Bay Business Chamber rejected all increases beyond the original MYPD schedule because the Business Chamber’s calculations of a real estimated year-on-year increase of 24% versus the 8% as approved by the five year price determination, would massively impact on the sustainability of business in the city.

The Business Chamber urged Nersa to constrain the increases as per the original price decision taken in 2013. This would mean the effective increase for next year is limited to 3.5%, given that Eskom was already allowed increases above the MYPD for the current year.

The main reasons for the rejection highlighted by Business Chamber Deputy President MC Botha and Member Company Autocast Executive Director David Mertens in a joint presentation were:

  • Eskom is seeking to recover inefficiencies through the RCA;
  • The application is unprocedural and irregular in various respects;
  • The consumer is being penalised for acting in accordance with the request by Eskom to reduce electricity usage.

Deputy President MC Botha said Eskom had brought the economy to the brink of collapse and the magnitude of what is coming is simply overwhelming. “Next year we will be back here for an even bigger RCA adjustment application by Eskom, estimated to be in the region of R30-billion,” Botha said.

He said it is the opinion of the Business Chamber that the RCA should be rejected on the basis alone that Eskom did not follow Nersa’s RCA methodology and that the application was in fact, irregular and unlawful.

Mertens said it was quite irrational from Eskom to ask businesses and the consumer to pay more money because Eskom had not sold enough electricity, this after Eskom’s continued appeals to consumers to reduce electricity consumption.

“Do we really owe Eskom R7.3-billion because we did not buy enough power in 2013/14? Electricity tariffs must stabilize in order for us to become globally competitive. The vicious circle of price increases and reducing consumption must be broken,” Mertens said.

He said sales to industry were down by 10% since 2010 and yet consumers are paying five times more for electricity than they did in 2000/2001.

“Will anybody need the Medupi or Kusile power stations when this goes on? Eskom is not dealing with poverty alleviation, what they are doing is creating the poor by trying to enforce these tariffs. Further drastic reduction of employment is inevitable if Nersa does not manage to constrain the increases,” Mertens said.