NERSA

Nersa kicks off consultations on Eskom’s latest R10.7bn RCA application

16TH FEBRUARY 2022

BY: TERENCE CREAMER

original article here

The National Energy Regulator of South Africa (Nersa) has initiated public consultations on Eskom’s latest regulatory clearing account (RCA) application, through which the utility is seeking to recover an additional R10.7-billion for the 2020/21 financial year – a period which coincided with South Africa’s most intensive Covid lockdowns.

Nersa has published a consultation paper and has requested stakeholders to submit written comments by March 7, after which it will host three days of virtual public hearings from March 9 to 11.

A decision will be made on April 28.

Eskom’s application is driven primarily by a large difference in the sales volumes achieve during the year and those assumed by Nersa in determining Eskom original allowable revenue for the financial year.

The Energy Regulator’s allowable revenue decision for 2020/21 was R221.8-billion for all customers, which translated to an average nominal tariff increase of 8.1% for standard tariff customers during the year, which was the second in the fourth multiyear price determination period.

The utility calculates the revenue variance to be R9.7-billion, after excluding R8.3-billion in Covid-related sales losses, which it estimates at 7.1 TWh for the period.

“Electricity sales during the period under review reflect a challenging macroeconomic environment as well as the impact of the pandemic,” Eskom says in its application, while stressing that both Covid- and load-shedding-related volumes had been removed from its revenue variance.

Load-shedding during the period is reflected in R1.2-billion being subtracted from the variance for the year.

Eskom is also claiming various cost variances for the period, including an operating expenditure variance of R6.1-billion, primary-energy-related revenue of R3-billion, including for diesel to operate the open-cycle gas turbines to limit load-shedding, and international purchases of R1.8-billion.

These claims are offset by over recoveries on depreciation of R6.6-billion, as well as R2.8-billion related to lower purchases from independent power producers and a return on assets of R296-million in favour of the customer.

The RCA amount also include R83-million relating to the phasing in of the nuclear decommissioning provision from an earlier RCA decision.

Eskom, which has launched several successful legal reviews of previous RCA decisions, also uses it submission to highlight delays in recouping amounts approve by Nersa or secured through court rulings.

“The average time for recovery has been over four years,” the utility asserts.

The RCA application is separate from Eskom’s pending allowable revenue application for 2022/23 that, if approved, could result in a 20.5% tariff hike on April 1.

The tariff determination could include a R3.4-billion amount approved following the 2019/20 RCA decision, approved in late 2021.

The Energy Regulator’s decision on the 2022/23 application is expected on February 25. 

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