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Nersa orders Eskom to share secret info, including cost of coal

Aug 11 2017 10:55
Matthew le Cordeur

Cape Town – National energy regulator Nersa has given Eskom until August 31 to provide secret business information, including the cost of coal, as part of its application for a tariff increase.

Eskom had requested earlier this year to deviate from meeting certain requirements of the multi-year price determination (MYPD) methodology and the minimum information requirements for tariff application (MIRTA).

Nersa said in a statement on Friday that, following a meeting held on July 27, the regulator "decided that no condonation will be granted" on the above requests.

In response, Eskom spokesperson Khulu Phasiwe told Fin24 on Friday that Eskom would adhere to the decision.

“We have no choice but to adhere to the decision,” he said. “We respect the authority of the regulator, but we will study the full decision to understand the full implication."

He said that some of the information, especially in relation to the coal prices, could give competitors who supply the same coal power stations sensitive information.

“By default, once you announce it, you are treading into agreements you have between competitors,” he said. “It will tell what you what you are getting from different suppliers. These are confidential agreements with the suppliers, but now we will have to give it to the regulator, and then it is up to them how they make it public.”  

Nersa did however grant Eskom condonation for its valuation of regulatory asset base (RAB) and information on deferred debits and credits.

On 27 March 2017, Nersa received an application from Eskom, requesting exemption from providing the following information as required by the MYPD: RAB, primary energy (disaggregated coal volumes, coal handling and water costs), and research and development (conducting consultation).

Eskom also requested exemption from providing the following MIRTA information: segmented cash flow statements, split of sales revenues between regulated and non-regulated industries, projected ten-year sales forecast, disaggregated line items such as RAB, coal purchases and burn, environmental levies and deferred debits and credits.

“The condonation regarding the Valuation of RAB was granted in respect of Eskom’s one-year (2018/19) revenue application,” Nersa said. “However, the Energy Regulator has instructed Eskom to revalue its regulatory asset base in time for its next MYPD application.

“Condonation regarding Information on deferred debits and credits [balance in the regulatory clearing account (RCA)] was granted since there is no decision yet on the RCA balance.”

Nersa gave Eskom 30 calendar days from the date of the decision (July 27) to comply with the MYPD methodology and the MIRTA requirements where condonation has not been granted, it said.  

This follows an application to Nersa by action group Outa, which was heard in early July. The group’s energy head, Ted Blom, said at the time that Eskom previously “blindsided” the energy regulator by saying it was operating efficiently and warranted tariff increases.

Blom pointed to allegations of corruption and irregular coal contracts, which will soon be investigated by a Special Investigating Unit inquiry.

“This was patently a massive lie perpetuated from 2007 onwards to date, and resulting in an additional trillion rand in Eskom revenue over this period, which has gone to waste or been stolen,” he said in his application to Nersa dated May 12.

Responding on Friday, Blom said: "We look forward to receiving the information and moving forward."

The application came after Eskom implemented Nersa’s decision of an average 2.2% tariff increase for the 2017/18 financial year in June. The increase was effective for Eskom customers from 1 April 2017, while municipal customers saw the average 0.3% increase start this month.

Eskom's board in June approved a draft revenue application for Nersa’s approval, after a leaked document showed it wants clients to pay 19.9% more from April 1 2018.

“The previous multi-year decision made by Nersa for the period 1 April 2013 to 31 March 2018 comes to an end on 31 March 2018,” Eskom chief financial officer Anoj Singh said in a statement on July 5.

“Therefore, there is a need for Eskom to make the next application. Nersa has approved that Eskom can make a revenue application for a single financial year – the 2018/19 year.”

nersa  |  outa  |  eskom  |  tariffs

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