Eskom's request to be granted an effective 16.6% tariff increase this year is widely opposed by stakeholders and the public who have made submissions to the National Energy Regulator of SA‚ Thembani Bukula‚ Nersa member for electricity said on Monday.
Nersa is in the process of holding public hearings on Eskom’s revenue-clearing account‚ a mechanism that allows the utility to recover unanticipated costs that arose while generating electricity.
The costs are recovered from consumers retrospectively by adding them on to the next year’s tariffs.
However‚ in order to do so‚ the regulator must deem that the additional costs pass efficiency tests and were prudently incurred.
Eskom is claiming an additional R22.8-billion from the 2013-14 year‚ which will amount to an 8.6% tariff increase. This would be on top of the 8% increase agreed for 2016.
Bukula said most submissions recognised the need for Eskom to be allowed some additional cost recovery through the tariff‚ but not the full 8.6%.
At the start of the public hearings in Cape Town on Monday‚ a Nersa panel interrogated Eskom’s application‚ raising questions about the effect of the increase on the economy; Eskom’s extensive use of diesel-powered turbines to keep on the lights; and the reasons for and effect of lower sales volumes.
The R22.8-billion Eskom makes claim to consists mostly of R11-billion in foregone revenue because of lower-than-anticipated sales; an extra R8-billion for the turbines; and higher coal costs of R2-billion.
Eskom chief financial officer Anoj Singh argued that the utility considered the effect of the increase on consumers and the economy.
“We did look long and hard at the implications on the economy‚ but we were also of the view that as Eskom‚ we have various stakeholders to take into account‚ not only the interests of consumers.
“We have a fiduciary duty to our shareholder‚ which is government‚ and we must demonstrate to investors that we can use the revenue-clearing account to improve the sustainability of the organisation‚” he told the Nersa panel.
Stakeholders that made presentations to the panel included the City of Cape Town and the South African Local Government Association‚ both of which argued against granting the full 8.6% to Eskom.
In particular‚ the stakeholders singled out whether it was reasonable to expect future consumers to foot the bill for Eskom’s lower sales in the past.