No-go for Eskom Tariff Hike!
Eskom’s electricity tariff hike application has been rejected by the National Electricity Regulator of South Africa.
According to the chairman of Nersa, Jacob Modise the decision to decline its rate hike request was based on the utility failing to justify delays in commissioning new power stations in Medupi, Ingula and Kusile.
Eskom did not assess how R23billion would affect its monetary performance, nor did it clarify the effect that its R60billion loan would have, after a government conversion into equity.
‘Selective Reopener’ Against Nersa Guidelines
The utility submitted a proposal for a ‘selective reopener’ of the 3rd multiyear price determination (MYPD3), which it would pursue during the last 3 years of the 5-year determination period, having started on 1st April, 2013 and running till 31st March, 2018. However, Eskom’s proposed ‘selective re-opener’ was found to go against the Nersa guidelines
Nersa to Incentivise and Penalise Eskom
Furthermore, Nersa announced it would be looking at ways of incentivising Eskom to take better care of its timeworn power plant fleets, as well as ways of penalising it for inefficiency and inadequate upkeep.
Eskom responded on Monday, advising it would examine the particulars of Nersa’s decline of its supposed 9.58% electricity tariff hike request and confer with government, before making any further comment on the matter.
A Triumph for Consumers
The Democratic Alliance (DA) praised Nersa’s decision as a victory for consumers, the economy and the unemployed of South Africa. DA shadow minister of energy Gordon Mackay commended the energy regulator for showing authentic objectivity.
Nersa held its own, despite severe pressure from the ruling African National Congress alliance (ANC) and government to increase electricity tariffs by an alleged 25.3%, which surely would have been catastrophic for our economy.
Mackay dismissed Eskom’s request as ‘unthinkable’, as it would have resulted in mass job losses, an unmaintainable rise in input costs, and the inevitable liquidation of small and medium-sized firms throughout the country.