The Chemical and Allied Industries’ Association (CAIA) has called on the National Energy Regulator of South Africa (Nersa) to conduct a comprehensive independent audit of Eskom’s operations, as well as its capital expenditure.
Nersa will, on December 7, make its decision on Eskom’s revenue application for the 2018/19 financial year, with Eskom having applied for an average tariff increase of 19.9%.
This follows Nersa’s decision to make Eskom comply with most of the requirements of the minimum information requirements for tariff application and the recently revised Multi-Year Price Determination Methodology, following an application brought by Eskom to deviate from meeting certain requirements.
CAIA executive director Deidré Penfold says, if the 19.9% tariff increase is approved, this will result in a staggering increase of 429%.
“CAIA . . . calls on Nersa to proceed with the public hearings that have been planned, but to reserve its ultimate decision on this application until there is a way forward with Eskom, which it views as a failing State-owned entity,” she said.
Penfold explained that CAIA members, for whom electricity is the primary source of energy, consume over 11 100 kWh/y of electricity.
“Electricity pricing has an economy-wide impact, including a negative effect on inflation, not only for our members but for all South Africans.”
She added that the proposed 19.9% hike that would be increased even further by any additional municipal tariff increases beyond the Eskom hike, would mean an additional 15c/kWh to be passed on to an already cash-strapped consumer and struggling economy.
Nersa’s mandate, she stated, is to conduct vigorous analyses to arrive at decisions that will ensure the sustainability of the licensee while protecting customers against unduly high prices. Its analysis includes conducting a prudency test and only costs that are prudently and efficiently incurred are allowed.