South Africa: Eskom On Approval of Electricity Price Hike By Nersa

Eskom appreciates the tough NERSA revenue decision for FY2024 and FY2025

Eskom again apologies for the severe extent of loadshedding. The impact on individuals and businesses is understood. The minimising of loadshedding is the highest priority for Eskom and continuous focus at all levels in the organisation is being given.

Eskom appreciates the tough decision made by the National Energy Regulator of South Africa (NERSA) for the FY2024 and FY2025 revenue determinations and recognises the pressures this determination will place on consumers. Once NERSA makes a decision on the restructuring of tariffs (as submitted during August 2020 and 2022), these decisions will ensure Eskom can apply the tariff adjustments to its customers from 01 April 2023.

In July 2022 the High Court ordered NERSA to undertake the necessary regulatory steps to assess, consult and make a determination on Eskom’s FY2024 and FY2025 Multi-Year Price Determination (MYPD) Application. NERSA was granted an extension to make the decision by 12 January 2023, since it required further time.

“Eskom notes the decision by NERSA. This decision will positively contribute from a financial and sustainability point of view,” said Calib Cassim, Eskom’s Chief Financial Officer. “The revenue determination of R319 billion and R352 billion for the financial years 2024/5 will allow a further migration towards a price level that reflects the efficient cost of producing electricity.”

Eskom notes the tempering of the volume of diesel for the operation of open cycle gas turbines to a load factor of 6%. It is evident that both Eskom and NERSA are aligned that every effort needs to be made to improve the energy availability factor at Eskom power stations. The shortage in capacity due to both Eskom performance and the delays in the Independent Power Producers projects needs to be addressed. It is noted that NERSA has reconsidered capital related costs when compared to the previous decision. This significantly contributes to allowing for Eskom to recover costs related to debt commitments.

Eskom awaits the reasons for the decision for the determination made by NERSA that will provide further insights on how the revenue determinations for FY2024 and FY2025 were derived. It is hoped that NERSA has taken the direction given by the Courts in previous judgements on related matters and that these have been correctly addressed.