Eskom applies to Nersa for a tariff increase

Eskom has asked the National Energy Regulator of South Africa for 15% tariff increase per year for three years, the power utility said in a statement on Friday.

Per the request, the increases would start in 2019/20. However, Nersa has previously not granted the full tariff increases Eskom has asked for.

Nersa recently approved a 4.1% increase effective in April next year.

Earlier this month, Nersa gave the power utility four years to recover R32.69bn, having approved the liquidation of Eskom's third multi-year price determination regulatory clearing account balances for 2014/15 to 2017/18.

In its statement, Eskom said the application was for Nersa to allow revenue of R219bn for 2019/20, R252bn for 2020/21 and R291bn for 2021/22 - a multi-year price determination 4 revenue application. 

It applied Nersa methodology to determine the necessary tariff hike, it said, phasing in the return on assets. This meant that only by the third year - namely 2021/22 - the allowed revenue would cover the full debt service commitments. For this to occur, it would need 15% a year, said Eskom. 

Allowed revenue being applied for did not cover the entire debt commitment cost, Eskom added. This would equate to a cash shortfall for the 2019/20 and 2020/21 years.

Proceeds from the liquidation of the multi-year price determination 3 RCA decisions would be used towards the debt service shortfalls, Eskom said.   

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