The National Energy Regulator of South Africa (Nersa) has granted Eskom approval to recover R13.3 billion as part of the power utility’s regulatory clearing account (RCA) application for the 2018/19 year.
In a statement, Nersa has stated that Eskom could recover an amount of R13.3 billion from tariffs charged to customers, special pricing arrangement customers and international customers. Ted Blom, an energy expert, has labelled the move “extremely disturbing”. He went on to say that, “even more disturbing was Nersa’s acknowledgement of Eskom’s severe corruption, yet has not held Eskom to account for this. In fact, there is no incentive for Eskom to account for corruption because they keep on getting tariff increases anyway. Effectively the consumer is funding the Eskom corruption, which to the best of my knowledge is still ongoing.”
Blom went on to say that Eskom tariff increases needed to be circulated to stakeholders first and only be implemented from April 2021 or later. Municipalities then approve its budgets and pass on the tariff increases to consumers from July of that year.
The regulatory clearing account application is a mechanism that allows Eskom to adjust for any over or under recovery of revenue for a particular year due to events which differ from initial assumptions made when the energy regulator granted tariffs. The under or over recovery is then accounted for in adjustments made in future tariffs. Eskom had sought to recover R27.3 billion for the 2018/19 year for adjustments to primary energy costs, the use of open cycle gas turbines as well as employee benefits and sales volumes.
Nersa has acknowledged certain governance failures had been a factor in Eskom’s under recoveries in the 2018/19 year. But the full extent of these governance failures and amounts associated with them, have not been fully quantified, Nersa noted. “Upon the completion of any investigations by any organ of state or commission into these governance failures, and if the failure is quantified, the energy regulator may, in future Eskom revenue applications, effect adjustments to Eskom’s revenue, based on the relevant outcome of the investigation,” Nersa said.
Previously, Eskom said it was working with law enforcement agencies to recover money lost due to corruption, adding any future revenue applications would be based on the outcomes of investigations.
