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Nersa grants Eskom extension on new tariff submission

22nd July 2016

By: Terence Creamer

Creamer Media Editor

  

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The National Energy Regulator of South Africa (Nersa) has approved Eskom’s application for an extension, until April 1, 2017, to submit a new multiyear price determination (MYPD) application.

The utility had originally been given three months, from March 1, to make a fresh submission, following its highly contested regulatory clearing account (RCA) application for the financial year 2013/14.

Following the RCA application and hearings, Nersa granted Eskom a partial clawback of revenue and cost variations recorded during the first year of the third MYPD3, which is meant to run until March 31, 2018.

This enabled Eskom to increase tariffs by 9.4% on April 1, which was above the 3.5% increase that would otherwise have been instituted as a result of a prior RCA adjustment for the MYPD2 period, but implemented during the MYPD3, in 2015/16. The adjustment resulted in a tariff increase for the year of 12.69% from April 1, 2015, which changed Eskom’s revenue base for the subsequent years of the MYPD3, under which five increases of 8% a year were sanctioned.

Following the RCA public hearings and the March 1 determination, Nersa instructed Eskom to prepare an MYPD4 application, which took account of material changes to the demand outlook and delays to Eskom’s build programme. The energy regulator also decided that Eskom’s RCA applications for the second and third years of the MYPD3 (2014/15 and 2015/16) should be submitted together.

However, on May 12, Eskom submitted a request for an extension, citing statutory consultation requirements and the revision of the MYPD methodology as reasons for the request.

“In view of the above, the process of reviewing the MYPD methodology has been extended to allow further consultations with stakeholders. The revised timelines for the review of the MYPD methodology will be communicated in due course,” Nersa said in a statement.

Eskom has indicated that it expects to apply for above-inflation yearly increases over the MYPD4 period, arguing that such increases are “necessary” for it to migrate to cost-reflective tariffs.

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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