HILARY JOFFE: Eskom sees off Nersa, now it must tackle big cost items

09 August 2020 - 00:17 By Hilary Joffe

It would have been laughable if the sums involved hadn't been so serious. Last February, finance minister Tito Mboweni gave Eskom a R69bn equity injection over a three-year period to help bail it out of its financial crisis. Last March, Eskom's regulator took the money away, deducting it from the revenue it allowed the power utility in calculating electricity tariffs over the three years. Last week, the Johannesburg high court threw out the National Electricity Regulator's (Nersa's) decision. It ordered it to give back the money and commented, scathingly, on the regulator's incompetence, given that this was the third time the courts had found that Nersa had got it wrong on tariffs.

The ruling will add almost 10 percentage points to next year's electricity tariff increases, with more to come. Eskom has welcomed that the courts insisted, essentially, that Nersa - which even before the case had conceded the principle that it could not treat an equity injection as a subsidy - must adhere to its own tariff methodology. But as mining company Glencore protested this week, SA's electricity tariffs have escalated more than 500% over the past decade. The latest ruling could just deepen the "death spiral" in which Eskom finds itself, in which ever higher electricity prices are pushing demand for electricity ever lower, as big users go off-grid - or shut down...

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