https://www.engineeringnews.co.za
Africa|Energy|Engineering|engineering news|Eskom|Financial|generation|Nuclear|Power|Renewable Energy|Renewable-Energy
Africa|Energy|Engineering|engineering news|Eskom|Financial|generation|Nuclear|Power|Renewable Energy|Renewable-Energy
africa|energy|engineering|engineering-news|eskom|financial|generation|nuclear|power|renewable-energy|renewable-energy-company

Nersa awaits RCA appeal before moving on new Eskom applications

Nersa regulator Thembani Bukula

Nersa regulator Thembani Bukula

Photo by Duane Daws

19th October 2016

By: Terence Creamer

Creamer Media Editor

  

Font size: - +

The National Energy Regulator of South Africa (Nersa) expects its application for leave to appeal a recent North Gauteng High Court judgment, which found its approval of Eskom’s third multiyear price determination (MYPD3) Regulatory Clearing Account (RCA) for the 2013/14 to be unlawful, to take place in November.

Full-time regulator Thembani Bukula reports the leave-to-appeal hearing could take place on either November 2 or 17, with the date for the actual appeal contingent on the outcome of the hearing.

He also reports that Nersa has decided to hold back from processing further RCA applications from Eskom for the 2014/15 and 2015/16 financial years, until the appeal is heard.

The State-owned utility has applied for RCA adjustments of R19-billion and R23-billion respectively for the two years in question, with the bulk of these claims relating to a loss of revenue due to lower electricity sales volumes and a rise in primary-energy costs.

In her August 16 judgment, Judge Cynthia Pretorius found Nersa’s deviation from the MYPD methodology, as well as its failure to communicate such deviation to stakeholders, to be “irrational, unfair and unlawful”.

Following public hearings, Nersa granted Eskom a partial clawback of revenue and cost variations recorded during 2013/14. Eskom sought to recoup R22.8-billion, Nersa granted Eskom R11.2-billion.

Nersa believes the judgment to be “flawed”, arguing that it is premised on erroneous information and also failed to take account of an earlier RCA decision relating to the MYPD2 control period. In addition, the regulator contends that the judgment is not implementable and creates a hierarchy of issues in the application of the MYPD methodology that disregards the objective of the methodology and how the RCA is decided.

Bukula says the decision not to proceed with Eskom’s subsequent RCA applications is based on a desire to have greater legal certainty on how MYPD applications should be handled, particularly as the judgment highlights a lack of adherence to the timelines outlined in methodology.

These timelines, together with a stipulation that Nersa secures quarterly reports for the period in question, are unlikely to have been met in the subsequent RCA applications submitted by Eskom earlier this year.

“We may have to look at other remedies,” Bukula asserts, raising the possibility of seeking a condonation order, or pursuing other options under the Promotion of Administrative Justice Act. “At the end of the day, we need to determine and regulate the prices of Eskom in a way that ensures its sustainability and price affordability.”

Despite the difficulties posed by the court ruling, Bukula says it is also positive, owing to the fact that it “elevates our rules to the same level as law, which we would never complain about”.

Had it not been for the case, Nersa would most likely be preparing for a new round of public hearings relating to the latest RCA applications.

Eskom would, however, be constrained in preparing a new application, or MYPD4, until the updated MYPD methodology is confirmed. Nersa aims to publish the new methodology by the end of October.

WIND & NUCLEAR

Meanwhile, Bukula confirms with Engineering News Online that Nersa is investigating a complaint laid against Eskom by the South Africa Wind Energy Association (Sawea).

Sawea has lodged an official complaint over Eskom’s refusal to enter into power purchase agreements with preferred bidders selected under the country’s highly regarded Renewable Energy Independent Power Producer Procurement Programme.

The association argues that Eskom’s actions amount to a failure to comply with the Electricity Regulation Act, stated government policy, as well as with the Ministerial determinations that provide the framework for the procurement of generation capacity from independent power producers. It has, thus, requested the regulator to impose the maximum legislated penalty of 10% of Eskom’s annual daily turnover for each day that Eskom continues to delay the programme.

Bukula says a report will be drafted and handed to the Energy Regulator to decide what further action should be taken. It is possible that a tribunal will be assembled to deliberate on the matter. However, Bukula also cautions that, while Nersa has the right to fine a licensee, such penalties are not currently binding under the law.

He also reveals that Nersa has not yet received any notification from the Department of Energy (DoE) about a proposal that Eskom, rather than the DoE, act as the procurer for the power-station component of the Nuclear New Build Programme.

Under the prevailing Ministerial determination for the nuclear programme, Nersa have given its concurrence for the procurement of 9 600 MW of new nuclear capacity. However, the notice identifies the DoE as the “procurement agency in respect of the nuclear programme”.

It is possible that the DoE might simply cede its procurement-agency rights to Eskom. “But we will still need to consult on the implicaitons of the proposed change on Nersa’s concurrence.”

Edited by Creamer Media Reporter

Comments

Showroom

SAIMC (Society for Automation, Instrumentation, Mechatronics and Control)
SAIMC (Society for Automation, Instrumentation, Mechatronics and Control)

Education: Consulting with member companies to obtain the optimal benefits from their B-BBEE spending, skills resources as well as B-BBEE points

VISIT SHOWROOM 
WearCheck
WearCheck

Leading condition monitoring specialists, WearCheck, help boost machinery lifespan and reduce catastrophic component failure through the scientific...

VISIT SHOWROOM 

Latest Multimedia

sponsored by

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION







sq:0.132 0.215s - 175pq - 2rq
Subscribe Now