Baleni's resignation points to impending electricity price hike

3 February 2015

The DA notes with concern the shock resignation of National Energy Regulator of South Africa (NERSA) CEO Phindile Baleni. 

Initial reports suggest that Ms. Baleni's resignation is a result of increased political interference at NERSA, aimed at watering down the regulators tough stance against Eskom. 

Highly regarded in the energy sector, Ms. Baleni's resignation to "pursue different interests" raises a myriad of unanswered questions:

NERSA under Ms Baleni's leadership both publicly and in the Portfolio Committee on Energy has been critical of Eskom Management and has denied exorbitant tariff increase granting only justified market related increases.

Highly placed sources at NERSA informed me that Ms Baleni was seen to be too independent in general and overly critical of Eskom. It is felt that Ms Baleni has been a major stumbling block in allowing Eskom to recover increasing operational costs via the consumer.

Ms Baleni was key in limiting Eskom's use of its diesel turbines to supply electricity to the national grid.

NERSA's longstanding defense of consumers, however, crumbled last week when they surprisingly backpedalled on a previous decision to severely limit Eskom's use of its expensive diesel-run power stations. 

The reversal of this decision on diesel - which will see SA electricity consumers footing the bill for an additional R2.5 billion - is at odds with Ms Baleni's stated opposition to additional price hikes, and the condition that Eskom recovers additional costs through improved internal efficiency and better cost management of its own operations. 

Under Ms. Baleni's leadership NERSA has remained a steadfast defender of the South African consumer, obstructing Eskom from bank-rolling its mismanagement at our expense.

NERSA is bound by its mandate to only allow the revenue an efficient operator needs. As the Eskom crisis deepened in recent months, government has repeatedly stated its support for higher tariffs. Going forward, NERSA will have its job cut out to maintain its independence and balance the needs of Eskom, its shareholder and consumers.

Should reports of political interference at NERSA be substantiated this would continue a worrying trend of the politicization of South Africa's state owned entities and regulatory bodies. 

Sadly, Ms. Baleni's resignation now heightens the possibility of a far more compliant NERSA CEO being installed, an appointment that will surely mean further electricity price hikes for consumers.

Statement issued by Gordon Mackay, DA Shadow Deputy Minister of Energy, February 3 2015

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