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Eskom wants a 30% price increase

Eskom wants a 30% price increase.
Eskom wants a 30% price increase.
Image: 123RF/ Wang Tom

If Eskom has its way‚ electricity prices will increase by more than 30% - but only if the National Energy Regulator of South Africa (Nersa) grants Eskom wishes.

Eskom submitted three Regulatory Clearing Account (RCA) applications to Nersa to try and recover R66-billion for over-expenditure and low sales in 2014/15‚ 2015/16 and 2016/17.

Eskom gave their projected sales and costs to Nersa as part of their RCA applications. Eskom can then retrospectively present the actual figures. If Nersa believes the costs were within Eskom’s control‚ the power utility has to pay for it. Otherwise‚ it is worked into tariff increases to recover it via consumers.

Former senior Eskom executive Ted Blom from Mining and Energy Advisors said if Nersa granted Eskom’s wishes‚ the public is funding the power utility’s “gravy train”.

Blom believes the backlog Eskom is trying to recover is due to corruption and mismanagement.

“The corruption is to a large extent related to the Gupta years.”

Energy analyst Chris Yelland believes looking at the past it is unlikely that Nersa will grant Eskom their wishes. Eskom asked for a 19.9% tariff hike in 2018/19‚ but in December Nersa granted only 5.23%.

“Eskom will be lucky if they half of what they apply for‚” Yelland said.

“Nersa may decide a good percentage of that was costs that were under Eskom’s control and sales volumes that are under Eskom’s control. They may grant a portion of that R66-billion.”

Blom said Eskom overestimated their sales and assumed the economy would grow 5% annually.

“The under-sales and over forecasting‚ well‚ that’s just blatant Eskom mismanagement and maybe fraud.”

Blom said consumers are increasingly going off Eskom’s grid by using solar panels to avoid the “excessive cost of centralised electricity”.

“It makes much more sense to eventually form a micro-grid‚ a couple users in the same category and they just then generate and consume their own electricity.”

Yelland believes RCA applications should be reviewed‚ because it is not serving its intended purpose.

“When your sales go down‚ you need to tighten your belt and become more efficient. In the case of Eskom‚ when the sales go down‚ they can just put up their price next year.”

Blom said the RCA allows Eskom to run at a loss‚ because it can recover some of their money via RCA applications.

Eskom did not immediately respond to the publication’s request for commen.

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