HomeIndustry SectorsFinance and PolicyEskom reviews NERSA decision in High Court on electricity pricing

Eskom reviews NERSA decision in High Court on electricity pricing

Eskom has initiated proceedings in the High Court to review the NERSA decision to reject Eskom’s MYPD5 application.

In a press statement on the Eskom website they said it was their “only available option to avoid extremely serious and negative consequences for Eskom and by necessary consequence to National Treasury”.

NERSA (the National Energy Regulator of South Africa) announced after a 30 September meeting that they endorsed the MYPD5 pricing and consequently rejected Eskom’s Fifth Multi-Year Price Determination (MYPD5) revenue application for the financial years 2022/3, 2023/4, and 2024/5.

The regulator intends to make an interim price determination for FY 2023 based on a new price methodology, which is as yet unknown. It has started its process to develop this new pricing methodology that will be applicable to the industry. The first step entails a consultation to determine the new pricing methodology.

This will be followed by the development of the actual methodology. All stakeholders will be given an opportunity to influence the finalisation of the new pricing methodology. Once this is finalised utilities will be required to submit applications to NERSA for analysis to be undertaken before price increase decisions are made.

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MYPD5 pricing rejected by NERSA creates uncertainty and risk, Eskom

Eskom’s urgent High Court review application requires NERSA to urgently process the state-owned utility’s revenue application for at least one year, as required by law. The proposed timeframe allows for a decision to be made in time for implementation by 1 April 2022.

“As required by law, Eskom had submitted its revenue application to NERSA on 2 June 2021. The application is for implementation from 1 April 2022. The revenue application was made in accordance with the prevailing methodology, as approved by NERSA. This methodology remains valid, until replaced by an alternate,” said Eskom.

On 30 September 2021, NERSA rejected the Eskom MYPD 5 revenue application and asked Eskom to make a new application based on a methodology yet to be developed. “This is impossible both from a legal process and timing point of view,” said Eskom.

Theresa Smith
Theresa Smith is a Content Specialist for ESI Africa.