NERSA rejects Eskom’s application for tariff increase

June 29th, 2015, Published in Articles: EE Publishers, Articles: Energize

 

On 29 June 2015, NERSA rejected Eskom’s application for a selective reopener of NERSA’s multi-year price determination (MYPD).  The power utility had requested a 12,61% tariff hike over and above the 12,69% it had already been awarded and which came into effect on 1 April 2015. Chris Yelland tweeted from NERSA’s offices in Pretoria that NERSA’s chairman, Jacob Modise, said that the regulator had a difficult time trying find a balance between electricity suppliers and users.

Modise gave the background to Eskom’s selective reopener application for the period 2015/16 to 2017/18, and gave details behind’s Eskom’s application. These include delays at the power utility’s new-build power stations Medupi, Kusile, Ingula; and problems it is experiencing at existing stations Duvha and Majuba.

Modise said that over 225 written responses had been received to Eskom’s application for a selective reopener, and 30 presentations were made at the public hearings. He summarised all the arguments against Eskom’s application for a selective reopener, showing that the list of arguments against Eskom’s application for a price increase is very long.

Modise said that NERSA is unable to access the full impact of the usage of open cycle gas turbine (OCGT) because Eskom had not provided details on new commissioning dates for Medupi, Kusile, Ingula.

As a result, NERSA denied Eskom’s selective reopener application, and turned down Eskom’s request for an extra 12,61% price increase.

NERSA’s Thembani Bukula, possibly responding to a recent comment allegedly made by Eskom’s CE, Brain Molefe, that the country must accept higher tariffs or more loadshedding, said that the regulator did not believe it was either a case of a price increase or load shedding, because the regulator believes that other options exist.

Although this particular application has been denied, the power utility can still reapply – i.e., submit a completely new application – but must do so in compliance with the MYPD methodology, taking the country’s constitution and monetary policies into account.

 

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