Friday, October 17, 2014

NERSA determination: Eskom’s Regulatory Clearing Account (RCA) balance:

In a recent statement by National Treasury outlining a Cabinet-endorsed package to close Eskom’s funding gap, estimated at R225 billion, it indicated that “government will support Eskom’s application to NERSA for tariff adjustments in line with the regulatory process”.

Thembani Bukula, the National Energy Regulator of South Africa (NERSA) full-time member for electricity has however reportedly said the regulator is not anticipating an approach by Eskom for a “reopener” of the current tariff determination.

Engineering News Online reported on 18 September 2014 that Mr Bukula told it that the current focus is on the Regulatory Clearing Account (RCA) mechanism, rather than reopening of the third multiyear price determination (MYPD3), under which Eskom has been granted yearly increases of 8% for the five-years from 1 April 2013 to 31 March  2018. The utility applied for yearly increases of 16%. The August 2014 edition of this e-Bulletin provided readers with a copy of the NERSA Media Statement advising that it had approved the Regulatory Clearing Account (RCA) balance of R7 818m for Eskom for the second Multi-Year Price Determination (MYPD2) control period, 2010 to 2013, and which will be implemented in the 2015/16 financial year. The Reasons for Decision (RfD) document was posted to the NERSA website at www.nersa.org.za sometime after 30 September 2014.

Mr Bukula has indicated that NERSA is working on various options, including allowing for full recovery in a single year, or spreading it over a number of years.

A Moneyweb Today article published on 1 October 2014 at  http://today.moneyweb.co.za/article.php?id=780329&cid=2014-10-01 reported that NERSA had decided on Tuesday (30 September 2014) to implement its RCA decision to grant Eskom additional R7.8 billion revenue from electricity tariffs, over only one year. That means that electricity tariffs will increase on average by 12.69% on 1 April 2015 for consumers who buy directly from Eskom. Municipal consumers will pay more from 1 July 2015 after the increase in the bulk purchase price has been factored into its retail tariffs. The full article includes argument for and against this decision by members of the Regulator Board.
The full Engineering News Online article, `Nersa not expecting a tariff ‘reopener’ following Eskom bailout declaration’, can be found at http://newsletters.creamermedia.co.za/servlet/link/14/63859/141325/1619787   (Source: Creamer Media’s Engineering News at www.engineeringnews.co.za) and the NERSA RFD (undated) and media statement of 3 October 2014 are available on the AMEU website at http://www.ameu.co.za/LibraryReports/IndustryDocuments.aspx#lt-5258211-nersa
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