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On the eve of public hearings about Eskom’s application for a 32% tariff increase next year, it has become clear that energy regulator Nersa will have little room to deviate from Eskom’s numbers and limit the increase substantially.
Independent economist Elize Kruger earlier said such an increase will have a hugely negative impact on the economy.
“Households are already under huge pressure due to the high cost of food and fuel, high taxes and rising interest rates.
“An increase like this will increase the burden on households and limit disposable income, putting downward pressure on economic growth.”
Eskom on Thursday updated the assumptions underpinning its application for a second time since it was first submitted as a three-year application on 2 June 2021.
The total allowable revenue it asks for has however remained unchanged from its previous update in January 2022, at R351 billion. This still represents a percentage increase of 32.03% from the amount Nersa approved for the current financial year.
The deadline for stakeholders to submit written comment has passed, but Nersa will hold public hearings next week where oral presentations will be heard. In the past few years, Nersa has often limited Eskom’s annual tariff increase substantially.
For the current year, for example, Eskom applied for a 20% increase, but Nersa approved only 9.61%.
One of the biggest factors in that decision was a deduction of almost R26 billion from Eskom’s R68 billion allowance for depreciation.
Eskom based the amount it applied for on the valuation of its regulatory asset base of R1.2 trillion. This followed a revaluation by independent international experts.
Nersa however rejected the valuation and put the value at R550 billion, which informed the reduction of the amount for depreciation.
Eskom took this part of Nersa’s decision about its revenue to court and on Thursday revealed that the deadline has passed without Nersa filing a notice to oppose the matter.
Eskom GM for regulation Hasha Tlhotlhalemaje said Eskom anticipates some kind of agreement with Nersa, which will be made an order of the court.
That means Nersa will have little scope for making big adjustments in the depreciation component of the application.
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