HomeIndustry SectorsBusiness and marketsPublic hearings on Eskom regulatory clearing account commences

Public hearings on Eskom regulatory clearing account commences

As from today the National Energy Regulator of South Africa (NERSA) is conducting public hearings into Eskom’s application in terms of the regulatory clearing account (RCA) balance for the second, third and fourth year (2014/15; 2015/16 and 2016/17 period) of the third multi-year price determination (MYPD3), totalling R66.6 billion.

Presenting the company’s case to recover the costs, Phakamani Hadebe, Eskom’s interim group chief executive said: “Our sustainability as Eskom depends on a sound regulatory environment that is aligned with existing NERSA rules and other legislative requirements. We therefore rely on NERSA to review our application in line with the multi-year price determination (MYPD3) methodology, which is a globally-accepted regulatory principle that reconciles variances between the projected and actual revenue and costs that Eskom incurred for certain elements. It is also worth noting that we based our application on the decision already taken by NERSA on our first RCA application for 2013/14. We have spent the money in the implementation of our mandate of providing electricity to South Africans by raising debt as it was not included in the revenue decision and need to repay those loans accordingly in order to ensure credibility with our lenders.”

Hadebe further emphasised that Eskom’s application only covers costs that were incurred efficiently and prudently as allowed by the regulatory clearing account (RCA) mechanism. “We are aware and mindful of people’s concerns. It is therefore important to note that Eskom is on a path of recovery on governance issues that have marred our organisation in the recent past. The new Board appointed in January 2018 has been embraced by the public and investors and is focusing on operational and financial stability and clearing governance issues by bringing all those engaged in fraud and corruption to account. Internal processes have resulted in disciplinary hearings, suspensions and resignations of implicated executives. Continued focus and effort will be placed in combating corruption and pursuing justice within the legal framework. We also welcome various investigative interventions that are underway to get to the bottom of recent acts of fraud and corruption and we are in a process of claiming back monies owing to Eskom, including money that was fraudulently paid to McKinsey and Trillian.”

The hearings will take place across the country in the next three weeks, from 16 April until 11 May 2018. The first session is taking place in Cape Town. Read more: Eskom RCA | WhatsApp message incorrect, states NERSA

The RCA process is entrenched in the NERSA MYPD methodology and is a globally-accepted regulatory principle that reconciles variances between the projected and actual revenue and costs that Eskom incurred for certain elements, the power utility highlighted.

A company statement added that the RCA mechanism allows the power utility to adjust for the over or under recovery to ensure that both Eskom and the consumers are treated fairly.

The under or over recovery is then catered for through the electricity tariffs in the following year or subsequent years.

Acting chief financial officer Calib Cassim said: “Eskom endeavours engaging in an open and transparent manner with all stakeholders to highlight that the RCA under review aims to recover efficient and prudent costs incurred from the previous financial years (2015, 2016 and 2017) and to account for sales volume variances.”

Babalwa Bungane
Babalwa Bungane is the content producer for ESI Africa - Clarion Events Africa. Babalwa has been writing for the publication for over five years. She also contributes to sister publications; Smart Energy International and Power Engineering International. Babalwa is a social media enthusiast.