Eskom Welcomes R69-Billion Recovery Decision Which Could See Rates Hiked

Eskom welcomed the Johannesburg High Court judgement today for the power utility to recover a R69-billion equity injection, in a phased manner over a three-year period, ruling that NERSA may not deduct the injection from Eskom’s allowable revenue. The decision means Eskom may now apply to increase tariffs.

Eskom said in a statement that prior to the court hearing, NERSA (National Energy Regulator of South Africa) was in agreement that the deduction of the equity injection had not been correct in terms of its MYPD (Multi-Year Price Determination) methodology. The judge was required only to make a decision on the recovery of the equity.

Eskom says this will allow it to migrate towards a situation where it could become more self-sufficient and be in a position to recover efficient costs and reduce its dependence for further equity support from the government.

Caleb Cassim, Eskom’s chief financial officer, says: “The judgement that has been delivered is very encouraging. It aids in instilling confidence in the regulatory regime within the country, by ensuring that the NERSA methodology is adhered to. The judgement will assist Eskom in paving the way forward towards financial sustainability.”

Eskom said it is understood that certain vulnerable sectors of the economy – poor residential customers and certain industrial sectors – will require special consideration.

“Various measures are already in place to protect the poor. In addition, Eskom has been participating, under the leadership of the Department of Mineral Resources and Energy (DMRE), in proposals where certain vulnerable economic sectors would be considered for targeted support,” said Eskom in the statement.

Eskom says it will work with NERSA in implementing the outcome of the court decision.