2. Pricing and Tariffs
2.1. EIUG Position
- Short-term tariff deviation
- Internationally competitive industrial tariffs
As stated in last month’s newsletter, following the EIUG Strategy Session held in July, the EIUG supports the enabling of a short-term tariff deviation with a view to stimulate economic growth and halting production and job losses, that are likely to arise from further steep tariff increases.
Furthermore, the EIUG supports immediate work to develop a framework under existing policy and legislation, to allow for deviation from set or approved tariffs in prescribed circumstances. This framework should be established for all energy intensive industries where output and employment is being placed at risk because of rising power tariffs.
The proposed internationally competitive, cost-reflective industrial tariffs should not be accessible only to EIUG members and direct Eskom customers, but also to any company that meets the objective criteria set by the regulator. For many companies, electricity makes up between 15% to 50% of their operating costs, which is unaffordable and untenable going forward. Key industrial and mining capacity has already closed or cut production, either temporarily or permanently, or moved offshore. Without urgent intervention, there will be no change in this downward trend.
2.2. NERSA Decision on Eskom’s Condonation Application
- Condonation regarding the Valuation of Regulatory Asset Base (RAB) was granted for this application only. Information on Deferred Debits and Credits (balance in the RCA) was also granted. All other requests were denied.
- Eskom needs to submit its revised application by 27 August 2017.
On 11 August 2017, NERSA announced,
“At its meeting held on 27 July 2017, the Energy Regulator decided that no condonation will be granted of Eskom’s request to deviate from meeting certain requirements of the Multi-Year Price Determination (MYPD) Methodology and the Minimum Information Requirements for Tariff Application (MIRTA), with the exception of the Valuation of Regulatory Asset Base (RAB) and Information on Deferred Debits and Credits.
The condonation regarding the Valuation of RAB was granted in respect of Eskom’s one-year (2018/19) revenue application. However, the Energy Regulator has instructed Eskom to revalue its regulatory asset base in time for its next MYPD application. Condonation regarding Information on Deferred Debits and Credits [balance in the Regulatory Clearing Account (RCA)] was granted since there is no decision yet on the RCA balance. The Energy Regulator has given Eskom thirty (30) calendar days from the date of the decision (27 July 2017) to comply with the MYPD Methodology and the MIRTA requirements where condonation has not been granted.”
The EIUG will comment on the revised one-year tariff application once it is published.
2.3. Constitutional Court ruling regarding RCA for 2013/14
- The Constitutional Court dismissed the appeal application on 2013/14 RCA ruling.
- The EIUG will engage with Eskom and NERSA regarding the pending three RCA applications.
On 22 August, the Constitutional Court dismissed the leave to appeal application by Borbet SA (Pty) Ltd and others against the Supreme Court of Appeal judgement, regarding NERSA’s decision to approve Eskom’s third Multi-Year Price Determination (MYPD3) Regulatory Clearing Account (RCA) for the 2013/14 financial year, as the application bears no prospects of success.
This decision clears the way for the RCA applications for 2014/15, 2015/16, and 2016/17 to be dealt with. Media reports state that the cumulative value of these three applications is around R60bn.
The EIUG will engage with both Eskom and NERSA on the value and process of these pending applications. We will keep members informed.