Picture: SUNDAY TIMES
Picture: SUNDAY TIMES

THE National Electricity Regulator of SA (Nersa) has declined an application by Eskom to raise the price of electricity this year.

"Nersa has decided not to approve the application," said Jacob Modise, the chairman of Nersa, in Pretoria on Monday.

Eskom had not provided reasons for the delays in commissioning its newest power stations of Medupi, Kusile and Ingula, said Mr Modise.

The utility had also failed to take into consideration the effect a R23bn cash injection would have on its financial performance, said Mr Modise. In addition to that, Eskom failed to provide information on what effect a government conversion of its R60bn loan into equity would have.

The Nersa guidelines did not allow for a selective re-opener, as Eskom had done, and the application did not comply with certain municipal acts, Mr Modise said.

He also noted that high prices of electricity would result in job losses, and that this was Eskom’s third multi-year price determination application to Nersa.

The energy regulator also said on Monday that it will look at ways of giving incentives to Eskom to maintain its aging fleet of power plants and penalise the utility for poor performance.

“We want to incentivise them for good maintenance and penalise them for bad performance,” Nersa’s head of electricity Thembani Bukula said.

Eskom said on Monday it that would study the details of the Nersa’s decision to reject its proposed 9.58% tariff increase. Acting CEO of Eskom Thava Govender said: “We note the decision made by Nersa‚ and we will study the details of the determination and consult with the shareholder before we can comment further on its impact.”

The requested increase‚ he said, was to fund higher usage of open cycle gas turbines and cover the cost of buying capacity from the short-term power purchase programme in order to limit the severity of load shedding and its impact on the economy.

'Victory for consumers'

The Democratic Alliance (DA) “gladly” welcomed the decision by Nersa on Monday. “This decision ought to be hailed as a victory for all electricity consumers‚ for our economy and for every unemployed South African‚” said DA shadow minister of energy Gordon Mackay.

He said despite pressure by the government and the ruling African National Congress alliance‚ Nersa had demonstrated true independence by refusing to be strong-armed into exorbitant tariff increases that would have had disastrous consequences for the country’s economy.

“It is unthinkable that Eskom expected an increase of that nature, which would have been an external shock to our economy‚ resulting in a massive reduction in jobs‚ an unsustainable increase in input costs‚ and the unavoidable closure of many small and medium-sized firms across SA‚” Mr Mackay said.

With Reuters, Staff Writer