Category Archives: NERSA

National Energy Regulator of SA

‘Rebasing’ for lower Eskom sales to trigger 9.4% hike even before any revenue adjustment

Engineering News, 20 September, 2017.

State-owned electricity utility Eskom has sounded a warning that, even if its allowable revenue is not increased at all for the 2018/19 year, tariffs will still need to rise by 9.4% simply to accommodate a “rebasing” of electricity sales volumes when compared with those approved in the third multiyear price determination period (MYPD3).

The utility has made a single-year application to the National Energy Regulator of South Africa (Nersa) for allowable revenue of R219.5-billion, which would translate to a hike of 19.9% from April 1 for direct customers and 27.5% for municipalities from July 1.

The submission, which is available on Nersa’s website, includes a request for R13.2-billion in higher operating expenses, R11.2-billion in additional independent powerproducer (IPP) costs, a R1-billion increase in primary-energycosts and R2.8-billion for international purchases. Even after “sacrificing” R12-billion in its return-on-assets request, based on a decision to “phase-in” its weighted average cost of capital over time, and factoring a R1.8-billion reduction in the environmental levy, owing to a fall in the amount of energysent out, its submission still translates to what would be a significantly above-inflation hike from April 1.

(Ed. note: And down the slippery slope we go – the higher the electricity tariffs, the less electricity we use, the higher the electricity tariffs – until everyone who can gets off the grid and Eskom and the municipalities are left with customers who can’t pay! Time for a new business model for our electricity utilities.)

Here is the full article

Eskom’s 20% uses ‘impossible’ assumptions

Fin24, 11 June, 2017.

Eskom’s plans to ask for a 20% tariff increase for next year assumes higher economic growth than just about anyone expects – and assumes a physically impossible doubling of sales by renewable energy independent power producers (IPPs), despite Eskom actively fighting against their coming online.

It also assumes that Eskom will get rid of about ­­4 300 workers – 10% of its workforce – by March 2019 by not filling the posts left vacant when a member of staff retires.

These assumptions make the application likely to once again result in an enormous additional tariff request later on using the so-called Regulatory Clearing Account (RCA), which is a monitoring and tracking mechanism that compares certain uncontrollable costs and revenues with actual costs and revenues incurred by Eskom.

A confidential draft of Eskom’s planned application for next year’s tariff hike to the National Energy Regulator of SA (Nersa) made its way into the public domain this week. It spells out all the mechanics regarding how the utility came to the 20% figure.

Here is the full article

Eskom wants Nersa to consider two outstanding RCA applications in wake of court ruling

Engineering News, 7 June, 2017.

(Ed. note: Oh no, here we go again. Eskom, DOE and the DPE are well and truly stuck in the mire of their past actions.)

State-owned electricity utility Eskom believes the decision of the Supreme Court of Appeal (SCA) to upheld an appeal by National Energy Regulator of South Africa (Nersa) and Eskom relating to implementation of a clawback mechanism in South Africa’s tariff-setting methodology opens the way for regulator to consider two further regulatory clearing account (RCA) applications that have been held in abeyance amid legal uncertainty…

.. It is also not immediately clear what would become of the one-year revenue application, for 19.9%, which Eskom was preparing to submit for the 2018/19 financial year. Should Nersa reconsider the outstanding RCA applications, and should Eskom receive clawback relief, it would have a material impact on Eskom’s 2018/19 application…

Here is the full article (or you could just wait for the dust to settle and see what happens!)


Eskom seeks 20% tariff increase

Energize, EE Publishers, June 2017.

Eskom wants its clients to pay on average 19,9% more for electricity from 1 April next year and proposes that municipalities pay 27,3% more for bulk electricity purchases from 1 July, 2018.

This comes against the background of controversy about an aborted irregular R30-million pension benefit for its former CEO Brian Molefe, after serving only about two years in the post.

The proposed increase was disclosed in a confidential draft tariff application for 2018/19 that Eskom submitted for comment to National Treasury and local government association Salga. Moneyweb has seen the document.

Eskom is expected to incorporate the comments from National Treasury and Salga before submitting its application to energy regulator Nersa in the coming week. Public consultations will be held before Nersa decides on the increase.

Busa urges Nersa to reject Eskom’s request to deviate from tariff methodology

Engineering News, 30 May, 2017

Business Unity South Africa (Busa) has heavily criticised what it describes as Eskom’s request for a “blanket condonation” from the National Energy Regulator of South Africa (Nersa) to deviate from the multiyear price determination (MYPD) methodology and minimum information requirements for tariff applications (Mirta).

In a letter to Nersa earlier this year, Eskom CFO Anoj Singhindicated that the State-owned utility would be submitting a one-year revenue application for 2018/19 on June 1. However, he also indicated that Eskom would be unable to meet certain requirements of the MYPD methodology, as updated in October 2016, as well as certain Mirta requirements…

… Eskom’s application, Busa added, was an attempt to motivate for price increases without justification, which undermined good governance and accountability…


In an earlier criticism of Eskom’s deviation application, the Organisation Undoing Tax Abuse, or Outa, challenged Nersa to hold public hearings, describing Eskom’s application as an attempt by the utility to “maintain secrecy on the coalsuppliers, qualities and prices”.

The issue of coal supply has come under intense scrutiny since the release of the ‘State of Capture’ report by then Public Protector Thuli Madonsela last year.

The report recommended that President Jacob Zumaestablish a commission of inquiry to further interrogate “observations” of possible corruption at Eskom and several other State-owned companies, and raised particular concern about contracts between Eskom and Gupta-family-linked coal miner Tegeta.

The report states that Eskom’s R659.6-million prepayment to Tegeta to facilitate coal supply to the Arnot power stationmay not have been in line with the Public FinanceManagement Act, as prepayment was not used to fund Optimum coal mine (OCM) operations, but rather to fund the purchase of all shares in Optimum Coal Holdings (OCH).

It notes that, on April 11, 2016, Tegeta informed the businessrescue practitioners and Glencore, which, in turn, informed the loan consortium, that they were R600-million short. On the very same day, Eskom held an urgent board tender committee meeting at 21:00 to approve the R659.6-million prepayment.

Here is the full article