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Eskom can’t hike tariffs without reason - BUSA

Jun 01 2017 07:22
Lameez Omarjee

Johannesburg – Business Unity South Africa (BUSA) opposes Eskom’s application to the National Energy Regulator of South Africa (Nersa) to raise electricity tariffs without justification.

This is according to a statement issued by the organisation on Tuesday, which indicates that Eskom wants to deviate from the methodology of the fourth Multi-year Price Determination (MYPD4) or the Minimum information Requirements for Tariff Application (Mirta).

READ: Eskom's next tariff application in doubt – expert

If Nersa grants the request, it means Eskom is not required to give reasons to motivate for electricity price increases.

BUSA said that this is not in line with good governance and accountability. The organisation wants such requests in future to be subject to public hearings. “BUSA will not support the condonation of non-compliance with critical processes,” said the organisation.

Nersa has a duty to balance the interests of all stakeholders, BUSA highlighted. This means price increases should be “considered and prescribed” with “full disclosure” of relevant information by Eskom.

BUSA further said the timeframe for public comment is constrained. Earlier in May, the Organisation Undoing Tax Abuse (OUTA) also raised concern over Eskom’s request for exemption of the requirements.

“We need greater transparency and more rational explanations from Eskom for its ongoing requests for high electricity tariff hikes, whilst poor leadership and shocking auditing process allow for the waste and corruption to continue unabated,” said Ted Blom, OUTA’s portfolio director for energy.

“More detailed information means the public are then better enabled to question the conduct and incessant tariff hikes that appear to be feeding the corruption at Eskom,” said Blom.

OUTA explained that the condonation would also exempt Eskom from disclosing information of its asset register, research costs, coal volumes burnt per power station per supplier, coal handling costs per station, water procurement costs per station and water treatment costs.

The energy regulator had capped hikes to 2.2% between 2017 and 2018, related to the MYPD3.  

READ: Eskom can hike prices by 2.2% in 2017 - Nersa

Eskom was granted permission by the regulator to submit a one-year revenue application for the year 2018/19, according to an invitation for public comment on Nersa’s website.

According to the statement, Nersa received a letter from Eskom on March 27, which explained that the power utility would not be able to meet the requirements of the MYPD4. Eskom had then requested exemption in relation to non-compliance with procedures set out in the MYPD4.

Nersa is yet to make an announcement on its decision. 

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