Free Market Foundation director Eustace Davie
Free Market Foundation director Eustace Davie

THE Free Market Foundation on Tuesday called on experts to interrogate the figures in Eskom’s latest electricity tariff application to the National Energy Regulator of SA.

"The matter is too important to be decided upon without thorough investigation," the foundation’s director Eustace Davie said on Tuesday. Eskom has applied for an average increase of 16% for each of the next five years of the third multiyear price determination from April to the 2017-18 financial year.

Public comments end on Tuesday next week, but National Energy Regulator of SA will hold further public hearings on the application in January and will make a decision at the end of February.

Eskom’s above-inflation price increases have come under the spotlight because of their crippling effect on key sectors of the economy and the poor.

"Independent experts — technical and financial — must interrogate the figures contained in the third multiyear price determination," Mr Davie said.

Eskom’s revenue requirements would increase from R91bn in the 2011-12 financial year to R293.5bn in 2017-18. Over the five-year period covered by the third multiyear price determination, Eskom’s revenue requirements will total more than R1trn, he said.

Eskom could reduce its revenue requirements if it made changes to some of the items in the tariff application.

These include a return to its shareholder, the government, primary energy costs for independent power producers, depreciation, integrated demand management as well as operating costs.

He reiterated calls for reforming the South African electricity market, starting with the opening up of the country’s transmission grid for independent power producers.

Mr Davie said that the transmission grid should be independently owned and managed. Eskom owns the grid in SA, something which he said raised a potential conflict of interest because of Eskom’s role as producer of electricity.

Mr Davie said that additional electricity in the country should be financed, built, owned and operated by private companies.

Eskom should concentrate on refurbishing, maintaining and replacing its existing power stations.

This goes against what is likely to be Eskom’s influential role in SA’s new electricity capacity.

The utility is the buyer of private power in the country, hence the raft of power purchase agreements it sealed last week with a number of independent power producers for the renewable energy procurement programme.

In addition to this, the Cabinet announced that Eskom would be the designated owner and operator of nuclear energy plants in SA.

The integrated resource plan for electricity makes provision for 9,600MW of nuclear capacity, with the first capacity due for commissioning in 2023.

© BDlive 2012