Shoddy work from the National Energy Regulator of South Africa (NERSA) has created uncertainty around electricity prices in South Africa.
This is the view of energy analyst Chris Yelland, who said the uncertainty relates to a series of regulatory determinations by NERSA which dates back to 2015.
There have been long delays in reaching these determinations and challenges in court because of work by NERSA.
This has created a situation where the courts are starting to refer decisions related to electricity pricing back to NERSA.
The regulator, in turn, is now organising public hearings to get comment from ordinary citizens about electricity prices.
This, Yelland said, is an ill-conceived idea as the complexity surrounding electricity prices means the public cannot really help NERSA with its determinations.
“There is a huge amount of uncertainty, and even NERSA said in a press statement it could not provide any certainty around the electricity price increase for next year,” he said.
This leaves the industry in a bad space, as companies need to know what the electricity price trajectory is to inform their planning, investments, and business decisions.
Yelland said the problems stem from NERSA being incompetent, timid, and trying to address the demands of a powerful monopoly – Eskom.
He said it is a tough task to balance the needs of customers – reasonable electricity prices – and the needs of Eskom to maintain a sustainable business.
“While it is a difficult balancing act, NERSA has to apply its own methodology correctly to avoid future court action,” Yelland said.