NERSA allowed R85bn a year in Eskom runaway costs – OUTA
6 March 2018
OUTA’s assessment of NERSA’s detailed reasons for decision on curbing Eskom’s 2018 tariff hike to 5.23%, following Eskom’s application for 19.9%, shows that NERSA is only now beginning to realise the role it needs to play in bringing Eskom’s electricity tariffs in line with reasonable generation costs.
“We have studied Eskom’s performance indicators over the past decade and believe that NERSA has been remiss in discharging its mandate to challenge Eskom’s runaway costs, which they keep factoring into their tariff framework,” says Ronald Chauke, OUTA’s Energy Portfolio Manager.
While the NERSA reasons for decision document is critical of Eskom’s inefficiencies and inability to forecast sales properly, OUTA believes that the regulator is now having to step in and curb Eskom’s costs at a late stage, which, if conducted according to OUTA’s calculations, will be a shock to the system and too big to address in the short term.
NERSA allowed the utility too high an increase, with a knock-on effect on the economy that NERSA notes is likely to cost about 4255 jobs and a combined loss of household income of about R1.7 billion.