The City of Cape Town has condemned Nersa’s decision to raise Eskom’s permitted tariff hike from the original 5-6% to almost 9% annually for the next two years. This is due to a Nersa calculation error in the original Eskom tariff application.
But as per the sources, the City sais that Nersa should have scrapped the hike entirely pending a full redetermination of Eskom’s multi-year price application.
Considering this, Member of the Mayoral Committee for Energy – Alderman Xanthea Limberg stated that instead of rubber stamping this additional Eskom tariff hike, Nersa should have completed a full, error-free assessment of Eskom’s financials.
According to Limberg, it is now public knowledge that Eskom is in a better financial position than forecasted to Nersa, based on actual interim Eskom financial results. In fact, Eskom is already generating substantial profits even under the lower originally approved tariffs.
Alderman Limberg said that this is strong evidence that the public is being unfairly burdened with this extra Eskom hike over 50% higher than originally permitted. As, Cape Town’s position remains that Nersa should have scrapped this additional hike in favour of a full redo of Eskom’s price application to ensure fairness and accuracy.
Furthermore, the submission by the City of Cape Town opposed the hike which pointed out that beyond Nersa’s error of failing to take asset depreciation into account there are likely many more inaccuracies with Eskom’s application, including incorrect financial performance forecasts and outdated asset valuations.
To this, MMC for Energy Limberg added that Eskom’s improved financial performance can only be rationally explained by a combination of higher electricity sales or lower operational costs than what was forecasted to Nersa. This required nothing less than a full reassessment of the Multi-Year Price Determination. The City is now assessing its legal options following Nersa’s rubber stamping of this extra Eskom hike.
Under Section-15 (1) of the Energy Regulation Act, Eskom is not permitted to generate excessive margins on electricity sales or make consumers cover the costs of inefficient operations.