Cape Town condemns Nersa’s approval of extra Eskom increase
The City of Cape Town has condemned Nersa’s decision to raise Eskom’s permitted tariff hike from the original 5-6% to almost 9% annually for the next two years. This is due to a Nersa calculation error in the original Eskom tariff application. But the City says Nersa should have scrapped the hike entirely pending a full redetermination of Eskom’s multi-year price application. Read more below:
Instead of rubber stamping this additional Eskom tariff hike, Nersa should have completed a full, error-free assessment of Eskom’s financials.
‘It is now public knowledge that Eskom is in a better financial position than forecasted to Nersa, based on actual interim Eskom financial results. In fact, Eskom is already generating substantial profits even under the lower originally approved tariffs.
‘This is strong evidence that the public is being unfairly burdened with this extra Eskom hike – over 50% higher than originally permitted.
‘Cape Town’s position remains that Nersa should have scrapped this additional hike in favour of a full redo of Eskom’s price application to ensure fairness and accuracy,’ said the City’s Mayoral Committee Member for Energy, Alderman Xanthea Limberg.
The City’s submission opposing the hike pointed out that – beyond Nersa’s error of failing to take asset depreciation into account – there are likely many more inaccuracies with Eskom’s application, including incorrect financial performance forecasts and outdated asset valuations.
‘Eskom’s improved financial performance can only be rationally explained by a combination of higher electricity sales or lower operational costs than what was forecasted to Nersa.
‘This required nothing less than a full reassessment of the Multi-Year Price Determination. The City is now assessing its legal options following Nersa’s rubber stamping of this extra Eskom hike,’ said Alderman Limberg.
Under Section 15 (1) of the Energy Regulation Act, Eskom is not permitted to generate excessive margins on electricity sales or make consumers cover the costs of inefficient operations.
