The power utility is challenging tariff increases approved by the National Energy Regulator of South Africa (Nersa) for 2019 to 2022. If Eskom gets its way, consumers will pay 50% more for electricity.
Eskom contends that approving increases by 9.41% for 2019-2020, 8.10% for 2020-2021 and 5.22% for 2021-2022 instead of the requested 16% was insufficient.
At the core of the recent court challenge is a R23billion cash injection it received from the government that Nersa deducted when approving tariff hikes for three financial years.
In its court application, Eskom contends that the alleged inadequate increase provided by Nersa presents a “material risk of potential catastrophic consequences”, not only for the power utility but for the country.
Energy expert Ted Blom said: “The contestation around the R23bn relates to the fact that at the time, Eskom and government said the money was to subsidise operating costs and Nersa dealt with it as an income statement item and deducted it from what the public had to pay and that is why we got an 8% increase rather than 16%.
“If that goes through and Eskom wins that case, then our tariffs will need to go up by another 10% to 12% per year. But then Eskom has another four applications to review Nersa’s Regulatory Clearing Account (RCA) decision and that is worth another R102billion and if Eskom wins all of that then the tariffs will go up by more than 50%.”
In addition to this court challenge, Eskom is seeking to recover R27bn through an (RCA) application with Nersa.
The public have until on Monday to make submissions on Eskom’s proposed increase, which could further hike up prices if approved.
Public hearings across all nine provinces are set to begin in Cape Town on February 3 and conclude in Gauteng on February 21.
Blom, who will be presenting at the public participation, said if this was also successful, it would mean another 17% increase.
“Eskom said they would R212billion in revenue, but only made R105billion so they were short by R27billion and that is why they are asking us to pay for,” he added.
“The ordinary customer is now faced with the fact that electricity is going to be more expensive and unreliable. So customers must cut down on electricity consumption and get another source of electricity.”
Nersa is expected to make a decision on this application on March 24.
Eskom now awaits judgment from the Pretoria High Court on its urgent application.
The regulator’s head of electricity and piped gas industry, Nomfundo Maseti, dismissed the application as having no urgency when responding in court papers.
“Eskom’s poor governance and mismanagement are the main causes of losses, this present application is an attempt to outmanoeuvre accounting for its poor management and non-compliance with procurement processes,” she said.
“The discretion exercised by Nersa (when granting tariff hikes) is an informed one and not exercised in a vacuum, in an economy where the increasing electricity prices are leading to the decline in sales and negative consequences for the economy.
“As a consequence, Eskom is compelled to recover the increase in cost from a shrinking customer base. To address this issue is to approve smaller tariff increase going forward that will attract additional sales volumes.”