HomeIndustry SectorsFinance and PolicyNERSA to oppose Eskom's high court application to review RCA

NERSA to oppose Eskom’s high court application to review RCA

South Africa’s national energy regulator, NERSA, has stated that it will oppose the Eskom high court application to review its RCA.

The application by Eskom sets out to review the regulator’s decision on the regulatory clearing account (RCA) and supplementary applications for the 2018/19 financial year.

NERSA confirms that at its meeting held on 28 April 2021, the energy regulator resolved to oppose the High Court application brought by Eskom Holdings SOC Limited (Eskom) against NERSA to review and set aside the energy regulator’s decision pertaining to the approval of a Regulatory Clearing Account balance of R13.271 billion for the 2018/19 financial year, and the regulator’s decision to grant Eskom’s supplementary revenue balance of R1.288 billion in respect of the 2018/19 financial year.

In late 2020, Eskom indicated it would study the regulator’s reasons for decision before making a decision on challenging the RCA decision. The Eskom judicial review application was received on 12 April 2021.

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Purpose of the NERSA RCA

The RCA application is a mechanism that allows the power utility to adjust for over or under-recovery of revenue for a particular year. This allows for any notable gap in the initial estimations made when the regulator initially grants the tariffs. The over or under-recovery is then accounted for in adjustments in future tariffs.

In arriving at the decision to oppose the application, NERSA considered the factual matrix, applicable regulatory and legal principles. NERSA further considered the impact of Eskom’s continuous court review applications on the Government’seconomic recovery plans, as well as hardships on customers.

In this regard, interested stakeholders are welcomed to join NERSA in opposing the review application if they consider that the Court decision may negatively affect them. NERSA will be opposing the judicial review application within the required timeframe and process.