Category Archives: NERSA

National Energy Regulator of SA

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.

https://www.crediblecarbon.com/news-and-info/news/eskom-seeks-20-tariff-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…

… COAL PROCUREMENT IN FOCUS

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

The South African government hasn’t given up the fight for nuclear

Hartmut Winkler, Professor of Physics, University of Johannesburg, in The Conversation, 17 May, 2017.

Nuclear energy in South Africa is a highly contested issue; so much so that a court recently ruled against the government’s plans to issue a contract for the construction of eight new nuclear power stations.

The ruling appeared to have delivered a significant blow to President Jacob Zuma, and those who support him, who had set their sights on immediate nuclear expansion. The court’s decision was met with jubilation by those opposing the nuclear plan.

The expectation was that the government would appeal the decision. It didn’t, but this shouldn’t be read as a shift in its thinking.

Minister of Energy Nkhensani Kubayi made it clear after the court ruling that, while there would be no appeal, the government remained fully committed to nuclear expansion, and was planning to initiate a new process without delay.

This signals a realisation by government that an appeal would have little chance of success, and that a lengthy court process would tie up the parties in legal cases for months or even years. This would delay a nuclear build even further.

The minister has made it clear that the government is not giving up on its push for the controversial nuclear plan. But it has realised the process must start from scratch. This is the clearest indication yet that Zuma intends launching the nuclear build before his term of office ends in 2019.

Adding to fears that the government isn’t giving up the fight was the surprise reinstatement of Brian Molefe as CEO of the country’s power utility Eskom. Molefe left the job under a cloud six months ago. His reappointment led to immediate and widespread public outrage. Many have interpreted his return as beefing up the quest for nuclear.

Molefe’s return, however, isn’t as critical to the nuclear project as imagined, as Eskom has maintained his pro-nuclear stance in his absence.

What’s more important is that it’s clear that contestation around the future of South Africa’s energy sector will continue unabated. This despite the president having been severely weakened in recent months, and with it the power of the pro-nuclear lobby supported by his faction.

And here is the original in The Conversation