Eskom has responded to three of the National Energy Regulator of South Africa’s (Nersa’s) recent decisions. These are:

• The implementation of the FY 2019 regulatory clearing account (RCA) decision
• The decision on Eskom’s FY 2019 supplementary application made in accordance with the High Court judgment and order
• The reviewed decision made on Eskom’s FY 2015 to 2017 RCA decisions in accordance with the High Court judgment and order

In terms of the financial year (FY) 2019 regulatory clearing account (RCA), Nersa has decided that an amount of R13,2-billion of efficient costs incurred by the power utility during the FY 2019 will be recovered over two periods. In FY 2022, R6,6-billion will be recovered, and a further R6,6-billion will be recovered in FY 2023. Eskom had requested that the full amount be recovered in FY 2022.

The regulator’s two decisions in accordance with High Court judgments and orders refer to the power utility’s supplementary application and the reviewed decision made on Eskom’s FY 2015 to 2017 RCA decisions. The utility says it will analyse whether the regulator’s decision is in accordance with the High Court judgement and court order.

All three decisions refer to costs which have been determined to be efficient by Nersa. These efficient costs were incurred between FY 2015 to FY 2019, which Eskom can only recover at the earliest in FY 2022. This implies delays up to seven years in recouping its expenses. The utility says that the regulator will probably allow the recovery of these costs in FY 2022. This will allow the smoothing of tariff increases and minimise the burden on the government.

Eskom stresses that the “User Pay” principle, where the consumer of electricity pays for the efficient cost of electricity should be enforced. Efficient costs do not go away. Eskom is required to depend on more and more debt as well as further equity support from the government – its shareholder – to continue to provide the electricity service. Thus, the consumer is continued to be provided a subsidy funded by the taxpayer, which has a negative impact on government’s other priorities.

Contact Sikonathi Mantshantsha, Eskom, Tel  011 800-3378, mediadesk@eskom.co.za