In South Africa, the national energy regulator NERSA confirmed that an agreement has been reached with power utility Eskom to add R10bn to the utility’s revenue.
The agreement, which was announced in a statement on 16 February, comes as the High Court of South Africa (Gauteng Division) ordered that the amount of R10 billion be added to Eskom’s allowable revenue.
The revenue will be recovered from tariff customers in the 2021/22 financial year. According to NERSA, the court order will result in an average tariff percentage increase of 15.63% in the 2021/22 financial year.
This order is in response to Eskom requesting the execution of a High Court decision that allowed the recovery of incorrectly deducted Government equity support for the FY 2021/22.
Since Eskom made this urgent application to the High Court, NERSA had made additional decisions related to recovery of efficient costs from previous years. The High Court order allows a further 5.44c/kWh increase.
Court ruling will not affect the vulnerable and poor
In response, Eskom welcomed the court order by the North Gauteng High Court, noting: “This order will result in an average price increase of approximately 15% in the electricity tariff for standard tariff customers starting on 1 April 2021.”
According to the utility, the court decision allows it to “recover efficiently incurred costs for the production of electricity. It also contributes to the ‘user pay’ principle and is likely to lessen the financial burden of supporting Eskom on the Government, releasing the government to focus on other priorities.”
Implementation of the order will allow Eskom to move towards addressing some of the revenue shortfalls and enable Eskom to recover prudently incurred costs for the production of electricity, which will help to improve financial sustainability, explained the utility in a statement.
The Eskom Chief Financial Officer, Calib Cassim welcomed the decision and stressed that poor residential customers will continue to be supported through the free basic electricity programme, as well as affordability subsidies provided for in the NERSA tariff decision.
Identified vulnerable industrial sectors will be considered by NERSA in terms of the short-term and long-term negotiated pricing agreements promulgated recently by the Department of Mineral Resources and Energy.
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