Business rejects possible Eskom clawback
Organisations representing SA’s largest industries are pushing back against a revenue clawback Eskom is asking Nersa to approve for the 2021/22 financial year.
A Business Day report says Eskom is hoping to recover almost R24bn through a regulatory clearing account application (RCA) submitted in April.
If approved, the R24bn RCA will be added on top of future electricity tariff increases, but business leaders claim Eskom should be allowed to recoup only a fraction of this amount.
The Energy Intensive Users Group (EIUG) said based on its analysis Eskom should not be allowed an amount higher than R1.1bn.
Business Unity SA (Busa) said Nersa should, at most, approve an RCA of R1.7bn. Both organisations argue consumers should not be made to pay for Eskom’s ‘inadequacies’.
‘We accept Eskom needs money to get out of the crisis it finds itself in, but it should be doing more to deal with inefficiencies,’ said EIUG CEO Fanele Mondi.
The EIUG believes the application is premised on a view that Eskom should be guaranteed revenue, irrespective of its performance or the causes of cost drivers and reasons for sales losses.
‘Guaranteed revenue is not the intention of nor in the spirit of the price determination methodology, especially when Eskom’s poor performance is the significant contributing factor to lower consumption and sales. Eskom’s poor strategic choices cannot forever be made a burden for consumers,’ Mondi said.
Both the EIUG and Busa also argued Eskom should not be allowed to recover the full open cycle gas turbines cost overrun of R9bn.
Instead, Eskom should be allowed to recover only those costs based on the standard tariff rate, which is about one-third of the cost of electricity produced by the turbines.
Article disclaimer: While we have made every effort to ensure the accuracy of this article, it is not intended to provide final legal advice as facts and situations will differ from case to case, and therefore specific legal advice should be sought with a lawyer.