Cape Town – The Nelson Mandela Bay Business Chamber (NMBBC) on Wednesday accused Eskom of bringing an unlawful and irregular tariff increase application to the National Energy Regulator of SA (Nersa).
In their joint presentation to the Nersa board Business Chamber deputy president, MC Botha, and Member Company Autocast executive director, David Mertens, said the regulatory clearing account (RCA) submitted by Eskom should be rejected for not following Nersa methodology.
Eskom has applied for a R22.8bn adjustment for its 2013/2014 financial year. If this is granted, it is expected to lead to a tariff hike of least 16%, the City of Cape Town told the panel on Monday.
The RCA application by Eskom is for cost recovery and revenue adjustments based on actual past variances and not a revenue application based on future estimates.
The NMBBC’s main objection was the “timing and frequency” of the RCA application.
Botha argued that the RCA had to be created during the year that the “deviations” were incurred and that possible adjustments should have been presented to Nersa on a quarterly basis.
He said that Eskom did not mention the RCA in the “Annual Financial Statements 2013/2014”.
Eskom hit back later on Wednesday saying Botha and Mertens’s presentation “showed a misunderstanding of the regulatory process as a whole”.
“The NMBBC based their whole presentation on a wrong premise,” the utility said in a statement.
“The RCA looks at what costs were incurred and compares this to the decision that was taken by the regulator. However, the Nersa decision at the time may be lower or higher in reality. The economy also did not grow at the rate that was anticipated at the time of the decision.
“This further impacted Eskom’s operations. The methodology allows for costs that are incurred prudently to be recovered and there is reasonable cause for us to submit to the regulator asking for an adjustment,” Eskom said.
The hearings move to Durban on January 21 and 22 2016.