Judgment reserved as Eskom takes Nersa to court over tariff increase

2020-01-15 17:44

Judgment was reserved in the case involving struggling state utility Eskom, which took a dispute with energy regulator Nersa to court on Wednesday, arguing that the regulator’s three-year tariff decision last year was flawed and threatened the power firm with financial disaster.

Eskom supplies more than 90% of South Africa’s electricity but struggles to keep the lights on and is dependent on government bailouts to stay solvent.

Eskom has asked the high court for an order allowing it to impose a tariff increase of 16.6% from April 2020 and 16.7% from April 2021, according to an affidavit seen by Reuters.

It argues that Nersa’s tariff decision for the 2019-2022 financial years should be set aside because the regulator incorrectly treated R69 billion of state bailouts when calculating the amount of revenue Eskom should be allowed to recoup via tariffs.

Nersa last year awarded Eskom average annual tariff increases of 9.4%, 8.1% and 5.2%, far below the annual increases of around 15% Eskom had applied for.

In its answering affidavit, Nersa said its decision carefully weighed Eskom’s sustainability, what consumers could afford and the impact on the economy.

It argues that granting Eskom the bailout money as allowable revenue would have resulted in excess returns in the three-year tariff window.

Judgment was reserved and it was not immediately clear when the court would deliver a ruling. – Reuters

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January 26 2020