State owned power supplier Eskom have had a High Court judgement rule in favour of setting aside the National Energy Regulator of South Africa’s (Nersa) decision to only allow the company to recoup R32.69 billion from customers for the 2014/15, 2015/16 and 2016/17 financial years.
The decision means that Eskom can now attempt to claim back double that amount, which may lead to higher tariffs as the financially embattled company seeks to gather R66.6 billion in regulatory clearing account (RCA) submissions.
JUDGEMENT MEANS THAT ESKOM CAN CLAIM BACK REQUESTED R67 BILLION
Eskom welcomed the judgment, which requires that Nersa now rethink their decision.
“This judgment means that Eskom will now be in a position to recover prudent and efficient costs that were incurred in these financial years,” they said in a statement on Tuesday 30 June.
“The Judgment accepts that Eskom had put forward a proper case for relief in those key areas where NERSA did not implement its methodology and precedents. The areas specifically dealt with are the treatment of revenue variances, coal costs, Independent Power Producer Costs and the capital expenditure clearing account.”
The RCA is designed to mitigate the differences between Eskom’s forecast revenue and costs when it applies to Nersa for power tariffs and the actual revenue and costs it subsequently reports.
“The judgement sets aside the NERSA decision and found the failure to process the decisions within a reasonable time was inconsistent with the Constitution,” Eskom said in the statement. Nersa has admitted to “procedural mistakes” which have effectively put the nail in the coffin of their court bids against Eskom.
WHAT NEXT FOR ESKOM VS NERSA?
Eskom will now await another judgment by the High Court regarding the misappropriation of the equity injections of another R69 billion in the NERSA revenue decisions for the financial years 2020-2022.
In this matter, NERSA again acknowledged that it incorrectly deducted the equity injections provided by the Government.
With regards to the prior judgement made on the 10th March 2020 for the revenue decision for the financial year 2019 that was also reviewed by the Eskom Board, a supplementary tariff application will need to be made.
“It is hoped that NERSA will undertake its mandate by ensuring that Eskom is allowed to recover its prudent and efficient costs. The outcomes of the judgements will aid in ensuring that NERSA corrects the current poor decisions and in future applies and abides by the rules when making determinations on Eskom’s Revenue Applications.”
“This would go a long way towards restoring credibility of the regulatory environment and will also aid in ensuring the consistency and predictability of regulatory decisions that is sought by many stakeholders, e.g. consumers, investors, rating agencies etc.”
