Energy regulator Nersa said on Thursday it was appealing the North Gauteng High Court judgment which set aside its decision to approve a 9.4% tariff hike for Eskom to recoup costs incurred in the 2013/14 year.
Nersa’s decision relates to Eskom’s Multi-Year Price Determination (MYPD 3) Regulatory Clearing Account (RCA) for the 2013/14 financial year.
The RCA allows Eskom to obtain adjusted revenues for prior years by after the fact adjustments to the electricity price. Once Nersa has approved it, the adjustment is effected through price increases in subsequent years.
The court ruled last Tuesday that Nersa must review its decision to allow Eskom to increase prices from April 1 this year by 9.4%, more than the 8% it had initially allowed, after a group of business people in Port Elizabeth took Eskom on for not being open about its expenses.
Through the RCA process Nersa on March 1 gave Eskom permission to recoup expenses amounting to R11.2bn it had not budgeted for in fiscal 2014 by raising tariffs an average 9.4% for standard customers for the 2016/17 financial year.
The business lobby asked the court to set aside and declare unlawful the R11.2bn RCA increase to the Eskom tariff, based on numerous irregularities in the approval process.
The North Gauteng High Court stated in its ruling that neither Eskom nor Nersa complied with the prescribed methodology for interim tariff increases.
Nersa said on Thursday it was of the view that the judgment was flawed. The regulator said the judgment has also created a hierarchy of issues in the application of the MYPD methodology without considering the objective of the methodology and how the RCA is decided.
“Therefore Nersa will be appealing the judgment on the grounds of it being premised on erroneous information, a non-implementable position, as well as its substitution of Nersa’s decision of 2014.”
Nersa said it is believed that the appeal will create certainty with regard to the regulatory framework as there will be an approved tariff in place during the appeal process. It will also allow an opportunity to clarify issues raised in the judgment.
The option to appeal is considered to be the most effective manner to remedy the situation created by the judgment while ensuring that regulatory certainty is sustained through the most available legal means without violating the contents of law and judgment, the regulator added.
Eskom said last Tuesday once Nersa has thoroughly examined the judgment, it will take a position on the matter.