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Electricity price hike on the cards after Nersa allows Eskom to recover billions

17 May 2020 10:23 AM
Tags:
Eskom
Nersa
Electricity tariff hike
National Energy Regulator of South Africa
electricity tariff
Eskom will be allowed to recover R13.3 billion from consumers for 2018/19. Everyone is a loser here, says Nersa's Nhlanhla Gumede.

The National Energy Regulator of South Africa (Nersa) has approved Eskom's application to (partly) recover the balance from its regulatory clearing account (RCA) for the 2018/2019 financial year.

The approval is for R13.3-billion of the requested R27.3-billion.

This amount will be recovered through tariffs charged to standard customers, special pricing arrangement customers and international customers.

RELATED: Hike electricity prices by 17% in March or South Africa may collapse - Eskom

Nersa said the reasons for the decision will be explained "in due course".

Africa Melane interviews Nhlanhla Gumede, who was appointed Nersa regulator member for electricity in April.

Gumede explains that the regulator can only make decisions based on publicly available evidence.

To the extent that everybody would know, there was a certain level of malfeasance and governance failures at Eskom, but until an authority like a court or a commission finds and says 'this was the extent of that governance failure'... until there is a court decision that does quantify and says 'yes, that cost was imprudently incurred and therefore please take it off', Nersa unfortunately cannot just on its own - because it is not a court of law - deduct that.

Nhlanhla Gumede, Regulator member for electricity - Nersa

When that decision is made in the future, that amount will then be deducted from any future claims that Eskom will make to the consumers of electricity.

Nhlanhla Gumede, Regulator member for electricity - Nersa

In this particular case, everybody is a loser says Gumede.

It means that electricity is going to cost R13-billion more than it cost and already electricity is expensive. Unfortunately, Eskom will then sit back and say 'but we have incurred that cost'. You may look back as a regulator and say 'perhaps some of those costs could have been prevented, perhaps as Eskom you could have been a little bit more prudent' but the fact is, we incurred that cost, so what do we do?

Nhlanhla Gumede, Regulator member for electricity - Nersa

The consumers here are a loser, and Eskom is a loser. We need, I think, as a community in South Africa to say how do we deal with this problem because clearly there is a problem... As you implement this R13-billion you're going to lose further demand because some people will shift to something else. Unfortunately the people most likely not to be able to shift are the poor.

Nhlanhla Gumede, Regulator member for electricity - Nersa

Hear more from Gumede in the audio below:


This article first appeared on CapeTalk : Electricity price hike on the cards after Nersa allows Eskom to recover billions


17 May 2020 10:23 AM
Tags:
Eskom
Nersa
Electricity tariff hike
National Energy Regulator of South Africa
electricity tariff

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