Eskom notes NERSA decision on its RCA submission

Tuesday, 1 March 2016: The National Energy Regulator of South Africa (NERSA) has announced that it would not grant Eskom the R22.8-billion variance it had requested for the costs incurred in the production of electricity in the 2013/14 financial year. It has instead approved an amount of R11.241-million, which amounts to a 9.4% tariff increase for the 2016/17 financial year. 

The Group Chief Executive of Eskom Mr Brian Molefe says, “Eskom has noted NERSA’s decision, which yet again doesn’t address the question of Eskom’s continued financial sustainability. In addition, it will have operational consequences.”

 “We note NERSA’s decision and will study the details contained in the reason for decision document once received before commenting on its implication,” says Molefe.

 “We understand the implementation of the regulatory rules in NERSA’s RCA balance decision. The decision on the revenue variance and certain primary energy costs including independent power producers is supported,” says Molefe.

 “We note with concern the decision on open cycle gas turbines (OCGTs), which will guide Eskom’s operations in the future in terms of balancing the energy supply and demand in a bid to avoid load shedding. We have reduced diesel usage in recent months and have made great strides in our maintenance plan, however we continue to run a constrained grid.

OCGTs are part of our emergency portfolio and have been used in the past to avoid or limit load shedding with the understanding that we can recover these costs within the RCA process. The recovery of diesel costs is now seriously in question with NERSA’s current decision. We will do our best to minimize the risk of load shedding, striking a balance with Eskom’s already depleted balance sheet,” adds Molefe.

In terms of the Municipal Finance Management Act (MFMA), the Minister of Public Enterprises will table the municipal increases in Parliament on or before 15 March 2016. 

Statement issued by Eskom, 1 March 2016