The judgement on the Eskom board review of the National Energy Regulator of South Africa’s (NERSA’s) decision on the Multi-Year Price Determination (MYPD) 4 was delivered on Tuesday, in favour of Eskom.
The judgement allows the power utility to recover the R69 billion, in a phased manner over a three-year period. This will mean that tariffs are likely to increase.
In a media statement, Eskom noted that prior to the court hearing, NERSA was in agreement that the deduction of the equity injection was not correct in terms of its MYPD methodology.
“The Judge was required only to make a decision on the recovery of the equity,” reads part of the statement.
The power company says it welcomes this decision which allows for the utility to migrate towards a situation where it could become more self-sufficient and be in a position to recover efficient costs and reduce its dependence for further equity support from the government.
Media Statement – Judgement of the High Court of South Africa delivered 28 July 2020. pic.twitter.com/WYq0z1CZTL— NERSA_ZA (@NERSA_ZA) July 28, 2020
Calib Cassim, Eskom’s chief financial officer, said: “The judgement that has been delivered is very encouraging. It aids in instilling confidence in the regulatory regime within the country, by ensuring that the NERSA methodology is adhered to. This judgement will assist Eskom in paving the way forward towards financial sustainability.”
It is understood that certain vulnerable sectors of the economy – poor residential customers and certain industrial sectors will require special consideration, stated Eskom, adding that various measures are already in place to protect the poor.
In addition, Eskom says it has been participating, under the leadership of the Department of Mineral Resources and Energy (DMRE), in proposals where certain vulnerable economic sectors would be considered for targeted support.
Eskom will work with NERSA in implementing the outcome of the Court decision.