Eskom mulls options after rejection by Nersa

POWER utility Eskom is considering its legal options after energy regulator Nersa last week rejected its MYPD5 (Fifth Multi Year Price Determination) pricing application, a move the state-owned enterprise considers will create a regulatory vacuum for the electricity supply industry.

In a terse response, Eskom spokesperson Sikonathi Mantshantsha told Business Report that “Eskom is considering its options in terms of the law and Eskom is committed to ensuring the required legal and consultation processes are followed’’.

“Eskom has to go back to the drawing board to submit an application for the 2022/23 financial year – based on an interim pricing methodology which would preferably be based on the principles of a new approach being considered.”

Nersa said after due consideration of the rationality and legality of applying an expired MYPD4 methodology, and whether this was in the public interest, the energy regulator rejected Eskom’s MYPD5 application.

The energy regulator requested Eskom to submit a one-year interim application for the 2022/23 financial year (FY), preferably based on the principles of a new approach that is under consideration.

“Even if the new methodology is developed in time, Eskom will not be able to make a new price application for implementation by April 1, 2022 until full statutory compliance, due process and legislative consultation have been complied with,” Eskom said.

In its decision, Nersa’s Charles Hlebela said the regulator intended to make an interim price determination for FY 2023 based on a new price methodology, which is was yet unknown.

The regulator has started its processes to develop this new pricing methodology that would be applicable to the industry. The first step entails a consultation to determine the new pricing methodology. Eskom also bemoaned the short time lines required for approving a new methodology and submitting a new application in accordance with the new methodology.

Hlebela said Nersa had embarked on a consultation process to gather comments from stakeholders to assist in the development of the new methodology that will ensure sustainable electricity prices.

– BUSINESS REPORT