The National Energy Regulator of South Africa (Nersa) will host public hearings in February as part of its adjudication of Eskom’s latest Regulatory Clearing Account (RCA) application for the 2018/19 financial year.
Eskom is looking to recoup R27.3-billion under the RCA mechanism, which is a backward-looking instrument designed to manage variances between returns approved by the regulator in the tariff against actual returns.
Nersa released details of Eskom’s 2018/19 RCA application on its website on December 3 and has set a deadline of January 20 for the receipt of written comments on Eskom’s submission.
Eskom says the revenue variance is due to the sales volume determined by Nersa in the decision not materialising. It also outlines key cost variances in coal, open cycle gas turbine fuel, depreciation, employee benefits and maintenance. Eskom is applying for R5.5-billion for revenue under-recovery, R16.8-billion for primary energy costs, R4.8-billion for other costs and R166-million related to service quality incentives.
Eskom insists that any revenue impact of load-shedding has not been included in the RCA variance.
The utility proposes that the RCA balance for the 2018/19 financial year be liquidated over the last two years of the three-year fourth multiyear price determination (MYPD 4) period, which covers the 2019/20, 2020/21 and 2021/22 financial years.
The regulator expects to make a determination on March 24. Eskom’s tariffs are adjusted on April 1.
The struggling State-owned utility has already been granted an increase of 8.1% for 2020/21 following Nersa’s adjudication of Eskom’s MYPD4 submission in early 2019.
Nersa sanctioned a 9.41% hike for 2019/20, but Eskom’s tariff rose by 13.82% on April 1, 2019, owing to the inclusion of a 4.41% RCA adjustment granted following Nersa’s adjudication of RCA applications for the final three years of the MYPD3 period.
Eskom applied to claw back R67-billion through the three RCA applications, but received only R33-billion.
Separately, Eskom has approached the courts for a judicial review of the regulator’s price determination for the 2018/19 financial year, the MYPD4 period, as well as the RCA determinations for the 2014/15, 2015/16 and 2016/17 financial years.
On October 11, the utility also applied for urgent interim relief against the Energy Regulator for its treatment, in the MYPD4 adjudication, of yearly fiscal transfers of R23-billion announced by Finance Minister Tito Mboweni in his February Budget.
Eskom claims the regulator’s decision to offset the equity investment not only falls foul of the MYPD methodology, but also “defeated the whole purpose of the government support”. The application is expected to be heard by the High Court in January.
The regulator said in a statement that it would host nationwide public hearings into its latest RCA application.
The first hearing is scheduled to begin in Cape Town on February 3, while the final day of hearings is set down for Midrand, Johannesburg, on February 21.
“Members of the public and stakeholders who wish to attend or present their views at any of the public hearings must submit their request to email@example.com by 15:30 on January 27, 2020.”