nersa
NERSA chairman Jacob Modise delivers energy regulator decision on Eskom's selective reopener application. Pic credit: rdm
NERSA chairman Jacob Modise delivers energy regulator decision on Eskom’s selective reopener application. Pic credit: rdm

In South Africa, the National Electricity Regulator of South Africa (NERSA) has dismissed state-owned power utility Eskom’s selective reopener of the third multi-year price determination (MYPD) for Open Cycle Gas Turbines (OCGTs) and Short-term Power Purchase Programme (STPPP) and the increase in environmental levy, asking for a 25.3% tariff hike.

The 25.3% includes the already approved 12.69%, 10.1% for OCGTs and the 2.5% change resulting out of the environmental levy at ZAR0.2 per kWh.

Eskom’s selective reopener application requested cost recovery of ZAR32,9bn for OCGTs and ZAR19,9bn for the STPPPs.

Public hearing

Last week, NERSA held a two day public hearing in Johannesburg, where members of the public were invited to express their views and opinions on the power utility’s selective reopener.

Speaking at the hearing, Eskom group executive, transmission and sustainability, Thava Govender highlighted a ‘few’ challenges motivating the tariff hike:

“Half of Eskom’s generation fleet is beyond mid-life and requires extensive maintenance.

According to Govender, the utility doesn’t have the ability to avoid all the outages due to insufficient funding and capacity constraints.

Speaking at the hearing last week acting Eskom CE Brian Molefe said: “We can point fingers and say who did what when, but, the fact of the matter is that we are now finding ourselves in a situation where we have to do maintenance and as a consequence of maintenance, we have to do load shedding because we have to shut off some generation capacity.”

NERSA decision

NERSA chairman Jacob Modise said: “Eskom should submit an application for the adjustment in the allowed revenue in accordance with the MYPD methodology.”

Alternatively Eskom can submit a new application for period 1 April 2016 to 31 March 2019 with indicative projections for the period 1 April 2019 to 31 March 2021.

He added: “The energy regulator did not consider the environmental levy increase as it was not gazetted.”

According to NERSA, Eskom withdrew its environmental levy application during the public hearings last week.

Modise continued: “The application did not provide the mechanism, on how the proposed increase, if granted, can be implemented in the current financial year in a manner that is consistent with the requirements of the Municipal Finance Management Act (MFMA) number 56 of 2003.”