Expect electricity price hikes – High Court rules in favour of Eskom

The High Court ruling on the Eskom board review of the National Energy Regulator of South Africa’s (NERSA’s) decision on the multi-year price determination (MYPD) was delivered on Tuesday 28 July.

The court found in favour of Eskom, stating that the power utility should recover R69 billion in a phased manner over a three-year period.

Eskom has previously indicated that this amount would be recouped through electricity price hikes, which it will now be able to apply for as a result of this judgement.

Eskom told MyBroadband that reports claiming it wanted to increase prices by 15% next year were correct.

Any price adjustments will likely be from 1 April 2021 onwards, Eskom said.

The utility said the correction of the unlawful and poor decisions made by NERSA will assist Eskom to return to financial sustainability.

“Prior to the court hearing, NERSA was in agreement that the deduction of the equity injection was not correct in terms of its MYPD methodology,” Eskom said in a statement regarding the judgement delivered today.

“The Judge was required only to make a decision on the recovery of equity.”

Eskom welcomes court judgement

Eskom said that it welcomes this decision, adding that it would allow the power utility 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”.

“The Judgement that has been delivered is very encouraging,” said Eskom chief financial officer Calib Cassim.

“It aids in instilling confidence in the regulatory regime within the country by ensuring that the NERSA methodology is adhered to.”

“This Judgement will assist Eskom in paving the way forward towards financial sustainability,” Cassim said.

Eskom implied that any price increases would not adversely affect vulnerable sectors of the economy, specifically mentioning poor residential customers and certain industrial sectors.

It added that it has been participating in proposals where certain vulnerable economic sectors would be considered for targeted support.

“Eskom will work with NERSA in implementing the outcome of the Court decision,” the power utility said.

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Expect electricity price hikes – High Court rules in favour of Eskom