HomeIndustry SectorsFinance and PolicyRCA application: Eskom CFO speaks out on affordability

RCA application: Eskom CFO speaks out on affordability

On Thursday, Eskom’s acting Chief Financial Officer, Calib Cassim, addressed stakeholders attending the Nersa Public hearings into the utility’s RCA application where the affordability of electricity was raised.  

Cassim acknowledged concerns raised and reiterated that government’s free basic electricity policy made provision for indigent electricity consumers.

“We are here to request Nersa to consider a legitimate application that seeks to ensure Eskom’s sustainability by claiming back those costs that we incurred efficiently and prudently in the provision of electricity. We rely on a sound regulatory regime to ensure our sustainability and ensure that we continue with our mandate to provide electricity in support of South Africa’s social and economic objectives,” Cassim said.

He added: “We want to clarify that this application is for three years, hence the big amount. This is a result of a court process that prevented Nersa from processing applications for each year that we are claiming for until it was resolved in 2017.

“However, we want to reiterate that we as Eskom are not numb to our customers’ concerns. We have indicated consistently that it is not our intention to get the whole recovery in one year.

“We have requested Nersa to liquidate it over a period to ensure Eskom’s sustainability while limiting impact on customers. To this end, we are working on a recommendation on how to phase in the allowed RCA balance decision and will share our thoughts with the regulator during the course of these hearings,” added Cassim. Read more: Eskom continues with RCA presentations

RCA application process

Cassim highlighted the fact that the RCA process is a fair model for electricity utilities and their customers, “The RCA goes both ways in favour of the consumer and Eskom depending on how close to reality the revenue allowed is to the forecast at the time of the decision. If Eskom’s sales forecast, for instance, had been higher in reality when compared to forecasts, the price of electricity (rate per kilowatt hour) would have been higher based on the lower forecast and the RCA would then be in favour of the consumer.

“Conversely, if a decision was based on a higher forecast when sales were lower in reality that would lead to a lower price of electricity at the time of the decision thus being a benefit to the consumer and the RCA being in favour of Eskom, as is the case here.”

The utility noted that the issue of governance lapses at Eskom arose from several stakeholders. Eskom has been addressing the matter at various sessions assuring stakeholders that the current leadership has prioritised cleaning out all governance-related matters.

There’s currently over 200 investigations including lifestyle audits to ensure that all acts of corruption are rooted out. In addition, Eskom has given an undertaking that all those who left under a cloud including companies involved in corrupt activities will never be rehired or allowed to do business with Eskom.

In cases where investigations show valid reasons, Eskom plans to pursue justice by taking those who are found to have committed crime to court.

Ashley Theron
Ashley Theron-Ord is based in Cape Town, South Africa at Clarion Events-Africa. She is the Senior Content Producer across media brands including ESI Africa, Smart Energy International, Power Engineering International and Mining Review Africa.