Business

Eskom wants R35bn more from consumers

2019-10-14 00:30

Eskom has accused energy regulator Nersa of trying to punish it in earlier decisions on electricity tariff increases.

It claims Nersa has done so by unlawfully rejecting Eskom’s valid claims to income that would be recovered from consumers through higher electricity tariffs.

Now it wants to recover R35 billion it claims to have missed out on from consumers.

Eskom’s finance head, Calib Cassim, said Nersa acted irrationally by not following the prescribed methodology in making the decision it led to.

Cassim made these accusations in a scathing supplementary affidavit, which was filed in court last week in support of an application to overturn three Nersa decisions about additional income for Eskom in terms of the so-called regulatory clearing account (RCA).

In February City Press’ sister publication, Rapport, reported that Eskom had approached the court to set aside three of Nersa’s decisions in respect of clearing amounts for the years 2014/15, 2015/16 and 2016/17.

In addition to these applications, there was another review application regarding Nersa’s tariff decision for 2018/19.

Eskom launched another application on Thursday, this time on an urgent basis, to review Nersa’s tariff decision for 2019/20 and 2021/22.

In its original RCA tariff applications, Eskom had asked for a total of R66.6 billion, but Nersa had given it only R32.69 billion.

This was to the advantage of consumers, who were saved even higher electricity tariff increases.

Nersa allegedly incorrectly recorded an amount of R1.2 billion as R1.7 billion and turned down a further R13 billion because Eskom did not supply supporting affidavits.

The clearing account is a mechanism in the prescribed methodology, in terms of which Eskom’s electricity tariffs are determined.

It is aimed at reducing risk. It puts the regulator in a position to make adjustments after the fact, if the assumptions that the initial tariff decision were based on played out differently in reality.

In the founding affidavit by Cassim, Eskom had argued that Nersa made a variety of errors.

Nersa penalised Eskom for load shedding, which it believed could have been prevented, but almost R14 billion was subtracted twice, said Eskom.

In addition, Nersa allegedly incorrectly recorded an amount of R1.2 billion as R1.7 billion and turned down a further R13 billion because Eskom did not supply supporting affidavits.

Eskom, however, attached the email in which the information was sent to various Nersa officials to the court papers.

Since then Eskom had, with much difficulty, obtained the record of Nersa’s decisions, which include recordings of meetings that preceded the decisions.

In a supplementary affidavit, Cassim said the record – which is still not nearly complete – confirmed Eskom’s previous arguments that Nersa had messed up and that the decisions should therefore be set aside.

Cassim said Nersa had had more than enough time since February to supply the complete record and the fact that it had not done so, despite various requests, created the impression the documents were being withheld because they would negatively affect Nersa’s case.

Read: Eskom price hike will squeeze consumers

The missing documents include a report from consultants PwC, which the decision-makers discussed; a letter from the former minister of energy, Mmamoloko Kubayi-Ngubane; and the minutes of a meeting between her and Nersa.

Cassim said it was impossible to understand from the record how Nersa had arrived at the figures it approved.

Nersa’s entire approach was incorrect, said Cassim.

Instead of keeping to the prescribed methodology and following principles it had laid down in previous judgments, Nersa tried to “punish” Eskom.

“This is seemingly one of the main principles Nersa applied in its decision-making [despite the fact that it is not provided for in the methodology],” he said.

Cassim said the record also confirmed that Nersa unnecessarily delayed making decisions, gave no consideration to Eskom’s repeated pleas about its weakening financial position and the necessity of obtaining the outstanding amounts.

He said Nersa erred further by doing an economic impact study which influenced its decision.

This was not authorised by the prescribed methodology, except in a subsequent decision on when power tariffs should be increased to recover amounts that had already been determined from consumers.

Nersa has yet to file papers.

The case is expected to be heard early next year.


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November 10 2019