Only work under construction associated with projects that create additional generation capacity may be included in Eskom’s Generation Regulatory Asset Base (RAB), according to the National Energy Regulator of South Africa (NERSA).
Outage-related and maintenance expenditure classified as work under construction is excluded “to prevent double recovery”, NERSA said in a statement setting out its reasons for the decision.
The decision is part of NERSA’s redetermination of Eskom’s Generation RAB, which resulted in the approval of R55 billion in additional allowable revenue in February.
The redetermination followed a December 2025 High Court judgment that set aside NERSA’s earlier decision and referred the matter back for reconsideration, NERSA said.
Transfers to commercial operation were approved but non-capacity-creating expenditure and maintenance-related work under construction were excluded.
Coal inventory included in net working capital was limited to 42 days in line with Eskom’s stockholding policy.
“Excess stockpiles attributable to construction delays were excluded from the RAB to prevent the passing through of inefficiency-related costs to customers,” NERSA said.
The regulator approved the depreciated replacement cost approach as applied after benchmarking Eskom’s overnight cost assumptions against international ranges.
Asset purchases and depreciation were also approved as applied. NERSA said trend analysis, used-and-usable criteria and ex-post Regulatory Clearing Account safeguards supported its assessment of asset purchases.
The redetermination was limited to Eskom’s Generation RAB, depreciation and the resulting effect on allowable revenue.
According to NERSA, submissions received during the consultation raised technical, legal and economic issues relating to asset valuation, outage-related capital expenditure, work under construction, transfers to commercial operation, affordability and regulatory consistency.
The regulator said it reassessed each component using the approved MYPD4 methodology and the same evidentiary record considered in its original MYPD6 decision.
No retrospective tariff adjustment will be made for the 2025/26 financial year, NERSA said.
