Eskom’s R67bn prayer could hike power prices 37%

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Eskom’s applications for R66.6bn in additional revenue via the Regulatory Clearing Account could result in a staggering tariff increase of up to 37%.

However, that will only happen in the unlikely event that the National Energy Regulator of South Africa (Nersa) grants Eskom all the additional revenue it has asked for – and lets it recoup it in a single year.

Eskom rarely gets everything it asks for and Nersa has the discretion to award the revenue over a period of its choosing.

The three pending Regulatory Clearing Account applications relate to the financial years ending March 2015, March 2016 and March 2017.

The majority of the money Eskom is asking to recoup through tariffs represents revenue shortfalls incurred because Eskom sold less electricity than expected when its tariffs for those years were set.

The state-owned electricity monopoly is facing a liquidity crisis and is postponing its latest financial results while it attempts to reach an understanding with funders that would allow it to remain a going concern.

The Regulatory Clearing Account process won’t do anything to help Eskom in the short term.

At best, it would permit an additional tariff hike after Nersa makes a determination on the request at the end of August.

Before then, funders can only assume that Eskom will fail to get what it has asked for and will only increase power tariffs by the 5.23% Nersa has already allowed for this year.

This should give Eskom revenue of R190bn in the year.

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