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May 29, 2008

Nersa settles into deliberation mode after intensive hearing process

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Nersa regulator head for electricity Thembani Bukula discusses the public hearings with Engineering News Online (29-05-2008)
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© Reuse this After having received more than 370 submissions and counting, and having posed over 150 questions to more than 40 presenters in its now concluded electricity tariff public hearings, the National Energy Regulator of South Africa (Nersa) now has to reach a decision on whether or not to grant an increase to State-owned Eskom by June 18.



The three-day hearings generated by far the most public interest in the regulator's history, regulator member for electricity Thembani Bukula told Engineering News Online on Thursday evening.

This was highlighted by the fact that, despite the closing date for submissions having passed, some were still rolling in - and Nersa had committed to interrogate even the late submissions.

Bukula said that there had been a common theme to many of the presentations, which was that there should be "smoothed" pricing methodology over a five-year period

‘VERY DIFFICULT'

This, however, left Nersa with a conundrum, as Eskom had only applied for a hike for 2008/9, and had only submitted figures and forecasts covering this year, relating to primary energy and demand-side management costs.

"For us to be able to say we can phase this, we need much more than we have been given," Bukula said in a telephone interview from Pretoria.

"We need an application that shows us the projections for the other years, so it's very difficult."

"To really get to the figures and numbers, we need figures and numbers and forecasts and budgets from Eskom to be able to pin it down," stated Bukula.

Nonetheless, he reassured that Nersa was not entirely rudderless: "What is important is that we know where we are," said Bukula. "We have a very good idea of what the price should be in five years and it's a question of plotting the trajectory of where we are and where we have to go to in five years."

"The principal of phasing-in is a principal that the regulator has always applied, and one that we will continue to apply," he added.

POLICY GAPS

Also apparent through the hearings was the overwhelming perception that there were "policy gaps, or policy vacuums that need to be filled" - particularly around pricing.

However, he said that the proposed policy changes that were discussed in Cabinet some four weeks ago did align with the route that Nersa had already taken, of having a price determination over a given period that would help to smooth increases and avoid any price shocks.

Bukula did not subscribe to the view that the people presenting at the hearings had strayed from the subject of the hearings. "Overall, I don't think that there is any misalignment between what the people have presented and the regulatory regime."

DECISION ANNOUNCEMENT

Bukula said that, given the interest shown, Nersa would call a press conference to announce its price increase decision on June 18.

The regulator had originally planned to announce the verdict on June 6, but, given the overwhelming interest, had been forced to extend its schedule.

Eskom has applied for a 60% tariff increase this year after it had been hit by surging coal and diesel costs.


Edited by: Mariaan Webb
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