Eskom submits supplementary tariff application to Nersa
Eskom has submitted a R5.4 billion supplementary tariff application to energy regulator Nersa, and for the first time it has also included interest – to the tune of R1.3 billion – in the application.
This follows a high court order made by Judge Jody Kollapen in March, that found Nersa’s determination of Eskom’s tariffs for 2018/19 was irrational and unlawful. Kollapen set the determination aside.
At that stage, Eskom’s R27 billion Regulatory Clearing Account (RCA) application was already before the regulator.
The RCA is a risk-mitigating mechanism that provides for retrospective adjustments – in favour of either Eskom or consumers – for revenue variations if assumptions underlying the revenue determination play out differently in reality.
Kollapen ordered that Eskom would, after the finalisation of the RCA, be allowed to bring a supplementary tariff application, should it still be short of the revenue it was entitled to if Nersa had made the initial decision lawfully. He laid down certain principles to be followed in deciding this application.
Nersa slashed Eskom’s RCA application to R13 billion.
The new application
In its new application, Eskom says certain amounts it was entitled to, such as the R511 million it wanted for demand-side management, it did not actually spend and is therefore no longer included in the outstanding amounts.
Other amounts were disallowed, and Eskom had no option but to borrow.
While the RCA makes no provision for the recovery of interest, Eskom argues that once the supplementary revenue has been determined, it should be compensated for the carrying cost incurred due to Nersa’s unlawful decision. “Only the interest cost, at a rate of 10% per annum compounded annually, is considered. The effect of inflation is not included”, it states.
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