Eskom seeks 25% immediate tariff hike in ‘selective’ reopener to Nersa


Eskom seeks 25% immediate tariff hike in ‘selective’ reopener to Nersa

The National Energy Regulator (Nersa) confirmed on Friday that it had received Eskom’s application for the selective reopening of the final three years of the third multi-year price determination (MYPD3) decision, which began on April 1, 2013 and will continue until March 31, 2018. Print Send to Friend 5 0 Should the application be approved, the 2015/16 increase would surge to 25.3%, inclusive of the 12.69% already granted for the current financial year. MORE INSIGHT Eskom says ‘selective reopener’ to cover final three years of five-year MYPD3 Eskom says ‘selective reopener’ to cover final three years of five-year MYPD3 An additional 10.1% was attributed to the extra costs associated with operating the open-cycle gas turbines (OCGTs) for extended periods, as well as the extension of the short-term power purchase programme (STPPP). Earlier this year, Nersa approved Eskom’s application to operate the OCGTs for up to 450 GWh a month, while the acquisition of over 800 MW of private power under the STPPP was renewed only marginally ahead of the March 31, 2015, expiry date. The 2.51% balance, meanwhile, related to the 2c/kWh increase in the environmental levy announced by Finance Minister Nhlanhla Nene in February. However, this pass-through amount would only be included once the necessary legislative framework was in place. Excluding the levy, the 2015/16 increase would be 22.27%. For the full three-year period, the cash-strapped utility was seeking R52.8-billion for its additional use of the expensive diesel-fuelled OCGTs (R32.9-billion) and the extension of the STPPP agreements (R19.9-billion) with independent power producers.

Eskom had been granted an extension for the finalisation of its tariff request to Nersa, which meant that the 2015/16 increase, should it be granted, could be implemented ahead of the next annual adjustment date of April 1, 2016. That being the case, Engineering News Online understands the higher base effect would allow the 2016/17 hike to be moderated to 3.24% (excluding the environmental levy), which would be followed by a 7.26% increase for 2017/18. Eskom spokesperson Khulu Phasiwe would not be drawn on the actual figures, but confirmed the trajectory of a steep hike in 2015/16, followed by more moderate increases in the subsequent two years of the MYPD3. Under the MYPD3, Nersa had originally granted Eskom five yearly tariff increases of 8%. But following a regulatory clearing account application for the MYPD2 control period, Nersa has granted Eskom a 4.69% upward adjustment to the tariff from April 1, 2015, which will result in a hike of 12.69% for direct Eskom customers.

Eskom submitted the reopener application on April 30, 2015, and Nersa spokesperson Charles Hlebela told Engineering News Online that the regulator was yet to determine what consultation process would be followed. In previous years, the regulator had typically held public hearings to help guide its determination, but Hlebela said that no decision had yet been made on the process that would be followed in this instance. He indicated that Nersa should be able to provide clarity on the matter in the coming week. “The energy regulator is considering the application taking into consideration the urgent need to stabilise the electricity network to avoid a possible total blackout and Eskom’s operational and financial challenges,” Nersa said in a statement. Eskom was anticipating that the tariff adjustments would be made during the current financial year, but Phasiwe stressed that the nature and pace of the process would be determined by Nersa. If granted, Eskom would face far fewer constraints with regards to its purchases of diesel for the OCGTs  – plants that had become increasingly important to the utility’s efforts to limit load-shedding in the context of high coal-plant unavailability due to breakdowns and ongoing maintenance.


Edited by: Creamer Media Reporter