Court case over Eskom price increases heats up

The National Energy Regulator of South Africa (Nersa) has been granted leave to appeal the decision of the High Court regarding the timing of Eskom’s recuperation of R69 billion in misappropriated equity.

Nersa previously submitted that it had wrongfully deducted the amount as revenue as part of its multi-year price determination (MYPD) methodology.

Eskom wanted to recover part of this money, in addition to other costs, through electricity price increases of 16.6% and 16.7% in 2020/21 and 2021/22.

Nersa, however, only granted Eskom price increases of 9.41% and 8.10% in 2020/21 and 2021/22 respectively.

Eskom said these lower price increases have left it with a R102-billion shortfall, of which the R69 billion made up a significant portion.

In July, the High Court ruled against Nersa and said that the power utility should recover the amount in a phased manner over a three-year period.

Eskom indicated that the R69-billion would be recouped through electricity price hikes, and told MyBroadband that it wanted to increase prices by 15% next year.

Price adjustments will likely be made from 1 April 2021 onwards, Eskom noted.

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

Timing of recovery

Judge Fayeeza Kathree-Setiloane’s latest decision means that the period of three years over which Eskom will be allowed to recover the money could be scrutinised.

Should the court decide that the money can be recouped over a longer period, it could mean that annual electricity price increases would be lower than anticipated.

Eskom CFO Calib Cassim said that the matter is of significant importance to the country.

“It would be beneficial for a Superior Court to prove an order on the recovery of the misappropriated equity,” Eskom stated.

“Eskom is committed to a speedy outcome to this process as any further delay in resolving this matter continues to burden the economy of the country,” it added.

Below is the statement from Eskom confirming the High Court’s decision to grant leave to appeal the timing.

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Court case over Eskom price increases heats up