Eskom did not breach licence conditions, says regulator

Robert Laing

Robert Laing

Though the energy regulator's inquiry into load shedding was scathing, Eskom views it as a legal victory.

Responding to the report by the National Energy Regulator of South Africa (Nersa), Eskom chief executive Jacob Maroga said: "We welcome the lack of finding that Eskom contravened its licence conditions."

Maroga also noted "no issue around negligence" was raised by Nersa.

He said his main criticism of the report was not its contents, but its omissions.

"There are gaps in the findings. Nersa did not examine the policy and regulatory issues that contributed to the current emergency."

Maroga blamed the government's vacillation over power industry policies for Eskom's current crisis. Nersa used the same excuse for not being able to find Eskom legally culpable for the rolling blackouts between November and January, which it estimated caused R50billion damage to the economy.

Nersa said it could not charge Eskom with breaching its licence conditions because the relevant laws "are drafted in the context of a competitive electricity market that was never introduced."

Its report does not entirely let Eskom off the hook. The inquiry failed to build a case against Eskom for breaching its licence conditions, but recommended further investigation.

It also recommended a minimum 20-day coal reserve should be included as a licence condition.

Nersa's report said "There was also an element of complacency on the side of Eskom management in not replenishing coal stockpiles timeously."

Maroga disagreed with these findings. "We have spent R7 billion more on coal than we budgeted this year. A quarter of our coal is being bought on short-term contracts at higher prices than long-term contracts."

Though denying Eskom bought insufficient coal, Maroga said the power utility had decided it was "imprudent" to order more coal at rocketing prices until it could recover the costs by negotiating higher electricity prices from the government regulator.