Eskom challenges energy regulator's 5.23% tariff increase

Cash-strapped power utility Eskom is finally tackling the controversial issue of its headcount.
Cash-strapped power utility Eskom is finally tackling the controversial issue of its headcount.

The National Energy Regulator of South Africa (Nersa) confirmed on Tuesday that Eskom has launched a court challenge for its decision to grant the power utility a 5.23% tariff increase.

Nersa issued a statement, indicating that it received the notice of motion on June 7 and is studying the notice to determine a way forward.

On December 15, 2017, the energy regulator approved a 5.23% tariff increase for the power utility, which had requested a 19.9% increase for the 2018/19 financial year.

This meant the regulator approved an allowable revenue of R190.348bn and not R219.514bn Eskom applied for.

Eskom is well within its rights to challenge the decision, in terms of the National Energy Regulator Act, the Electricity Regulation Act and the Promotion of Administrative Justice Act, a set of laws which “empowers any person to institute proceedings in the High Court for the judicial review of any decision by the Energy Regulator”, Nersa said.

Last week in a statement the Organisation Undoing Tax Abuse criticised Eskom’s decision to take the matter before the courts, and said the power utility instead should address its internal issues.

“Eskom should focus on addressing internal issues and rather use the courts to address gross mismanagement.

“Nersa’s decision to grant only a 5.23% electricity tariff increase for the 2018/19 period should stand unchallenged,” said Ronald Chauke, OUTA's portfolio manager for energy.

The organisation is also seeking legal advice on how to ensure that prices don’t increase, said Chauke.

“Eskom must share a status report about its progress towards recovering the money lost due to poor decisions and corruption that manifested through state capture and other malfeasance during the tenure of the previous executives and quantify such before they turn to tariff increases,” he said.

He also raised concerns that the court challenge will result in a drawn-out process. He said this could negatively impact submissions for the fourth Multi Year Price Determination application.

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