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Energy Regulator of SA (Nersa) member responsible for electricity regulation, Thembani Bukula, said yesterday.
 
This could further delay a decision on a tariff hike, which should have taken effect two months ago. The regulator
also has to hold public hearings on June 8-9 before arriving at its decision. Bukula said Eskom had simply based
its application on a previous decision by Nersa that the utility could get a 25%-a-year increase. It had not provided
detailed information on why this was necessary in terms of its capital requirements and balance sheet.
 
But the circumstances had changed, and the assumptions were no longer entirely valid. “There is not a particular
justification in the application for the 34% increase other than saying the regulator had indicated that future
increases would be between 20% and 25% and that Eskom had added another 9% for inflation,” Bukula said in
an interview at the Africa Utility Week energy conference. “If they are just going to say “give us what you have
given in the past”, we are probably going to say that conditions have changed and that one cannot just assume
that they are the same, so give us new figures. 
 
“From those figures we will have to extract efficiencies, and say that there we don’t think you should get an increase
and so on,” Bukula said. When Nersa decided to reduce the increase in Eskom’s previous application from 60% to 27%,
 it indicated that future tariff increases would have to be between 20% and 25%, provided financial conditions did not
 change much. It also stipulated that Eskom’s drawdown of the government’s R60bn loan had to proceed as expected
and Eskom’s capital expenditure programme should not change.
 
At the time, Nersa did not specify whether its projected hikes were real or nominal increases, but Bukula said the
regulator expected consumer price inflation to be less than 6%. Bukula said Eskom considered the 34% to be low as it
would not cover road maintenance and demand side management. If the tariffs fully recovered Eskom’s capital
expenditure of R87bn this year, Eskom would require an 88% hike to make up the shortfall of R27bn after the R30bn
drawdown from the government loan and the R30bn it could borrow on the capital market.
 
LINDA ENSOR
Political Correspondent
Source: Business Day
 
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