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Nersa studying ruling to set aside Eskom tariff hikes

Aug 17 2016 09:59
with Bloomberg

Cape Town - The National Energy Regulator (Nersa) announced on Wednesday that it is studying and analysing the North Gauteng High Court ruling on its decision earlier this year regarding Eskom’s regulatory clearing account (RCA) application for the first year of the Third Multi-Year Price Determination (MYPD3) period for the 2013/14 financial year.

The court ruled on Tuesday that Nersa must review its decision to allow Eskom to increase prices from April 1, after a group of business people argued Eskom needed to be more open about its expenses.

The RCA allows Eskom to obtain adjusted revenues for prior years by after the fact adjustments to the electricity price. Once Nersa has approved it, the adjustment is effected through price increases in subsequent years.

Through the RCA process Nersa on March 1 gave Eskom permission to recoup expenses it had not budgeted for in fiscal 2014 by raising tariffs an average 9.4% starting on April 1, more than the 8% it had initially allowed.

READ: Court sets aside Eskom tariff hike

The applicants asked the court for the R11.2bn RCA increase to the Eskom tariff to be declared unlawful and set aside, based on numerous irregularities in the approval process.

Their application noted that Eskom should have provided more regular updates on its financial situation as outlined in the RCA.

The North Gauteng High Court stated in its ruling that neither Eskom nor Nersa complied with the prescribed methodology for interim tariff increases.

The Nelson Mandela Bay Business Chamber hailed the ruling as a big win for businesses and consumers on Tuesday. “We are very satisfied with the outcome of the judgment as this is a massive win not only for businesses in Nelson Mandela Bay, but for all electricity consumers in the country," said the chamber's deputy president MC Botha.

READ: Eskom tariff ruling a massive win - chamber

Eskom said it will study the judgment before taking a decision on the way forward.

"Once Nersa has thoroughly examined the judgment by the high court, it will take a position on the matter, which will then be communicated in due course," the regulating body said in a brief statement.

Court sets aside Eskom tariff hike

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