Nersa grants Eskom 9.4% tariff increase


The National Energy Regulator of South Africa (Nersa) has granted Eskom a 9.4% tariff increase for the 2016/17 financial year.

Briefing reporters on Tuesday, Nersa chairperson Jacob Modise, said the regulator has granted the power parastatal a 9.4% tariff increase for standard tariff customers.The tariff is applicable for the 2016/17 financial year only.This as the regulator made an announcement on its decision regarding Eskom’s Regulatory Clearing Account (RCA) application for the first year of the Third Multi-Year Price Determination (MYPD3.)

In November last year, Eskom submitted its RCA application for consideration by the regulator. Eskom applied for an RCA balance of R22.8bn in its favour.In its submission, Eskom said the move was driven substantially by revenue under-recovery and higher primary energy costs.The tariff increase will be effective on 1 April 2016.

“The tariff will be effective from 1 April 2016, but it will be introduced differently for municipalities and the like but it’s effective from 1 April 2016,” says Modise in response to a question.

The regulator said the RCA balance of R11.2bn is recoverable from standard tariff customers, local Special Pricing Agreements (SPAs) and international customers. It also decided that the amount of R10.2bn is recoverable from standard tariff customers for the 2016/17 financial year only.

The amount of R983m is recoverable from Eskom’s local SPA customers and international customers for the 2016/17 financial year only.

“Eskom applied for R22.7bn and yes we gave them R11.2bn. We gave them half of what they asked for,” continued Modise.

Modise says more than 18 written comments were received from various stakeholders, including private individuals and trade unionson the matter.Nersa also conducted public hearings in six of the country’s nine provinces between January and February 2016.

“This was to afford interested and affected stakeholders an opportunity to present their views, facts and evidence. The Energy Regulator has, in making its decision, also considered the public interest and input from stakeholders,” states Modise.

Modise continued that Eskom should rather bring in a MYPD4 application.

“Eskom’s application was related to the first year of the MYPD, which was from 2013 to 2014. In accordance with the RCA methodology, it was going to be within Eskom’s right to apply for subsequent year (2014/15.)

“… As the regulator, we’d like to create a bit more certainty in the economy. We would actually prefer that Eskom bring in a MYPD4 application in the place of all these RCA applications,” he concludes.

The power utility must submit a new MYPD application within three months, based on revised assumptions and forecasts that reflect its recent circumstances.