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The National Energy Regulator of South Africa (Nersa) on Thursday announced that it had decided to give Eskom R665 billion in revenue over the next three years.
The power utility had sought a total of R784 billion in revenue over the next three years, made up of power increases of more than 15% as well as R21.6 billion to recover revenue shortfalls.
However, instead of three consecutive price hikes of more than 15%, Nersa granted Eskom three annual power price hikes of 9.41%, followed by 8.1% and then 5.22%.
Regarding the revenue shortfalls, Nersa only granted Eskom R3.86 billion as the state energy regulator debarred most of Eskom’s claims.
Nersa chairperson Jacob Modise said the watchdog had received more than 119 000 comments in response to Eskom’s two applications.
He said Eskom had suffered from “governance failures” and that Nersa might probe these failures.
Eskom needed to provide a plan to Nersa within the next six months about how it would cut costs, he added.
To improve operational efficiencies, Nersa suggested that Eskom:
• Reduce costs and provide a plan within six months on cost cutting measures;
• Cut unplanned outages and trips;
• Reduce water usage costs; and
• Develop a maintenance plan showing how it would execute maintenance.
Eskom had applied for R219 billion for the 2019/2020 financial year, R252 billion for the 2020/21 financial year and R291 billion for the 2021/22 financial year.
Instead, Modise said Nersa had granted Eskom revenue of R206.4 billion for 2019/2020, R221.84 billion for 2020/21, and R233 billion for 2021/22.
“The energy regulator also considered that Eskom conceded that certain governance failures occurred. The energy regulator may initiate its own investigation into the governance failures in Eskom and may effect adjustments to Eskom’s revenue based on the relevant outcome of its investigation and/or those undertaken by bodies or entities, including, but not limited to, Eskom, National Treasury, the Special Investigating Unit, the South African Directorate for Priority Crime Investigation (Hawks), Parliament or any commission of inquiry as and when they are concluded or a conclusive outcome is reached and the costs associated therewith have been quantified,” Modise said.
