Tuesday, September 09, 2014

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

The National Energy Regulator (NERSA) announced on 30 July 2014 that it had approved the Regulatory Clearing Account (RCA) balance of R7 818m for Eskom Holdings SOC Limited (‘Eskom’). The approved RCA balance is for the second Multi-Year Price Determination (MYPD2) control period, 2010 to 2013, and will be implemented in the 2015/16 financial year.

On 29 August 2013, Eskom submitted its RCA assessment for the three years of the MYPD2 for consideration by the Energy Regulator. Eskom applied for a cumulative RCA balance of R18 396m. In terms of the applicable provision of the MYPD Methodology, the Energy Regulator, upon application by Eskom, has to assess certain qualifying allowed revenue and expenditure against actual revenue and expenditure.

The RCA is a depository for qualifying variances between the revenue and expenditure approved for Eskom in the MYPD2 and their actual revenue and actual expenditure during the control period. The RCA is necessitated by the fact that the revenue and expenditure approved for Eskom is largely based on forecasts. The MYPD Rules require that from time to time a reconciliation of these variances be done in order to quantify over/under collection of revenue and over/under-expenditure on Eskom’s part. The Energy Regulator allows only expenditure that has passed the efficiency and prudency tests.

A copy of the NERSA media statement announcing its decision is available on its website at http://www.nersa.org.za/ or here. Although this statement claims that `The Reasons for Decision (RfD) document will be available on the NERSA website at www.nersa.org.za in due course’, no such document was available as at 26 August 2014.

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