At a media briefing on 1 March 2016, the National Electricity Regulator of South Africa (NERSA) announced the approval of an average 9,4% electricity price increase for Eskom for the 2016/17 financial year, while rejecting Eskom's claim for a higher tariff increase to compensate the utility for unbudgeted costs of diesel incurred during the 2013/14 financial year.

 
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NERSA's Thembani Bukula

Using the regulatory clearing account (RCA) mechanism, Eskom applied in late 2015 to recover from electricity customers, via an additional tariff increase in 2016/17, some R22,7-billion of variances in its actual costs and sales revenue in 2013/14 from those projected in its MYPD3 price application.
 
After receiving 82 written submissions from affected stakeholders, and holding public hearings around South Africa in February 2016 to hear oral submissions from the public, NERSA rejected about half of Eskom's claim, and only allowed the pass-through of some R11,2-billion as being prudently and efficiently incurred.
 
In respect of Eskom's claim for R8-billion for unbudgeted diesel costs in 2013/14, NERSA ruled that the utility's extensive use of diesel-powered OCGTs in the Western Cape was a direct result of the poor performance and low availability of Eskom's coal-fired power stations, well below international benchmarks, and the late completion of Eskom's Medupi, Kusile and Ingula new-build programme.
 
Of its R8-billion diesel claim, Eskom was thus only allowed the recovery of R1,25-billion, this being the cost of coal to generate electricity equivalent to that generated by the unbudgeted diesel used.
 
Eskom CEO Brian Molefe disagreed with the NERSA decision, issuing a statement after NERSA's announcement that "yet again" NERSA's decision does not address the question of Eskom's continued financial sustainability. "We note with concern the decision on OCGTs, which will guide Eskom's operations in the future in terms of balancing the energy supply and demand in a bid to avoid load shedding", said Mr. Molefe.
 
Mr. Molefe further complained that the diesel-powered OCGTs had been used in the past to avoid or limit load shedding on the understanding that Eskom could recover these costs within the RCA process. He added that that while Eskom would do its best to minimise the risk of load shedding, with the utility's already depleted balance sheet the OGGT decision "will have operational consequences".
 
NERSA has also ruled that Eskom must submit a new multi-year price determination (MYPD4), within three months, because the assumptions and forecasts upon which MYPD3 was based for the years 2013/14 to 2017/18 have materially changed. A new multi-year price determination is thus expected to become effective from 1 April 2017. This is clearly required to reflect both the current economic circumstances and Eskom's position, and therefore to provide more certainty to the electricity price trajectory in the years ahead... (more)

 

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Over the course of 2 days, the event will give attendees an unrivalled insight into the future of the vibrant and dynamic electronics sector, with a uniquely local flavour.
 
Top 7 highlights to expect at SAEI Expo 2016

• Buyer-seller meetings
• Vendor development talks
• International exhibitors
• VIP lounge 
• Innovators' zone
• Trade & Industry KZN and Government zone
• A number of educational institutes to encourage studies in the engineering field