5 reasons why Nersa turned Eskom down

By Drum Digital
30 June 2015

Nersa announced that it had declined Eskom's application for an additional price increase beyond what had already been approved.

The National Energy Regulator of SA (Nersa) on Monday announced that it had declined Eskom's application for an additional price increase beyond what had already been approved.

Here are five reasons why the energy utility failed in their bid to charge South Africans more for their electricity:

1.  "At the time when they [Eskom] made the application, they did not show us the savings they would have made from other options... and other saving which would have accrued from other plants." - Nersa electricity sub-committee chairperson, Thembani Bukula

2. "From where we sit we didn't get the impression it was this [a price increase] or an increase in load-shedding" - Bukula

3. "Section 28(6) of the MFMA [Municipal Finance Management Act] prescribes that municipal tax or tariff may not be increased during a financial year, i.e. after July 1 2015." - Nersa chairperson, Jacob Modise

4. "The application did not allow for the credible long-term planning and certainty that the MYPD [multi-year price determiniation] seeks to achieve. Indeed it works against such." -Modise

5.  Eskom not indicating the economic impact of the proposed price increase and other sources of funding, and changes in other MYPD assumptions - Modise

Eskom, which imposes rolling blackouts on an almost daily basis due to inadequate electricity capacity, is facing a funding gap to 2018 of up to R200bn.

The government has pledged to provide Eskom with a R23bn capital injection and a R60bn loan from the state will be converted into equity to improve the utility's liquidity and boost its borrowing capacity.

In his closing remarks, Modise said, "The regulator [Nersa] has not closed the door to Eskom. What we have said, we've left the door open to Eskom to submit an application in accordance with the MYPD methodology, so Eskom is free to submit an application that provides all the information that will allow us to make a decision."

Source: News24

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