Budget 2021

Eskom to challenge energy regulator in court over tariffs

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Eskom has approached the North Gauteng High Court to challenge the energy regulator's decision to grant it a lower tariff increase, which it says left the company with a shortfall of R102bn.

The National Energy Regulator of South Africa (Nersa) in March extended tariff increases of 9.41%, 8.1% and 5.22% to Eskom over three years.

The debt-ridden power producer had applied for price hikes of 17.1% for 2019/20, 15.4% for 2020/21 and 15.5% for 2021/22 to raise funds. The company had argued that the increase in the price of electricity would help it lower its growing debt burden.

"Following analysis of the reasons for decision, the Eskom Board decided on taking the matter to court," said Calib Cassim, Eskom’s Chief Financial Officer, in a statement on Friday. 

He said the company had "put in an application for urgent interim relief, which is necessary to avoid financial disaster for Eskom".

"We are seeking an order to address this shortfall in a phased manner. In addition, we are seeking the court to review and set aside Nersa’s MYPD4 revenue decision and remit that decision to Nersa for reconsideration in the light of the Court’s judgment," Cassim said. 

Eskom's request for increases was opposed by business, labour and civil society in written and oral submissions to the regulator.

Bailouts 

The state-owned power utility received a lifeline in the February Budget speech of R23bn every year for the next three years from National Treasury. A separate special appropriations bill is also currently being considered by Parliament, to grant the utility R59bn in funds over two years.  

In July, Eskom reported a net loss after tax of R20.7bn for the 2019 financial year. While its total debt stands at about R440bn, it is also facing a growing burden of non-payment from some municipalities.

It is not the first time that Eskom has challenged Nersa in court over tariffs. Earlier this year, Eskom launched a court bid to have tariff increases reviewed, Bloomberg reported. 

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