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Eskom has noted the decision made by the National Energy Regulator of South Africa (NERSA) on Thursday, to approve R206,380 billion, R221,843 billion, R233,078 billion, which translates to 9.41%, 8.10% and 5.22% price increases for years 2019/20 to 2021/22 respectively.

According to the utility, this excludes the approximate 4.4% already approved during 2018 for the Regulatory Clearing Account (RCA) recovery for the 2015 to 2017 financial years. On the RCA application for year 5 (2017/18) of MYPD 3, NERSA has approved an amount of R3.869 billion.

NERSA made this decision based on the information at its disposal and the analysis of Eskom’s Regulatory Clearing Account (RCA) application for year 5 (2017/18) of the third Multi-Year Price Determination (MYPD3) period and Eskom’s MYPD4 application for a duration of three years, from 2019/20 to 2021/22. Read the full NERSA statement here.

Eskom has looked into cost efficiencies from its operations and the shareholder has given support of R69 billion over the next three years.

This is an important step to restore Eskom’s credit worthiness as debt providers, rating agencies and other stakeholders awaited this crucial decision. 

The Eskom Board will deliberate further before deciding on how best to address the shortfall and we keenly await the reasons for the decision as NERSA has disallowed R102 billion of revenue over the MYPD4.

Calib Cassim, Eskom’s Chief Financial Officer commented: “Eskom’s application was fully compliant and based on the current regulatory policy and methodology. The underpinning principle of the application was the need to ensure Eskom’s financial sustainability to enable it to fulfil its mandate to supply electricity to the country.

"The methodology provides for the recovery of prudent and efficient input costs and as such the amount applied for was driven largely by expenditure on coal, maintenance, and human resources, as well as the cost of servicing the debt raised to finance Eskom’s investment in South Africa’s energy infrastructure.”