Eskom received no Christmas gift

Tariff pain for consumers has been postponed till the new year.

Consumers will now have to wait until the new year for word on what is likely to be a significant rise in electricity tariffs.

Nersa, the energy regulator, has been allowed an extension to establish Eskom’s prices for 2024/25; it now has until January 12 to do so.

The High Court in Pretoria had ordered Nersa to make a judgement “on or before 24 December 2022”.

On Tuesday, it remained unclear if the utility would still provide its long-awaited financial statistics for 2021/22 before Christmas.

When asked about rumours that Eskom will host its AGM on Friday (23 December), with a media and stakeholder briefing following, Calib Cassim, the group’s CFO, stated this has yet to be confirmed.

Following the hiring of new auditors, Eskom restated its results for 2020/21, raising its loss by 38% to more than R25 billion. It has failed both the end-of-September mandated deadline and its self-imposed extended deadline of 30 November to report its results for the fiscal year ending 31 March 2022.

This was extended to December 30, although Cassim already told Moneyweb that he intends to have it finalised before Christmas.

Eskom COO Jan Oberholzer said that Eskom has already spent double its upwardly adjusted fuel budget in an effort to keep the lights on, which is anticipated to have a significant impact on the statistics to be announced.

Increase in tariffs

Eskom has requested a 32% rate rise for 2023/24, followed by a 10% increase the following year.

This figure includes an R15 billion court-ordered repayment of a portion of the R69 billion Nersa wrongfully withheld from Eskom’s permitted earnings over three years in lieu of an R69 billion government equity infusion. It also added R1.7 billion as part of a claw-back under the Regulatory Clearing Account (RCA) mechanism, which is intended to limit risk for Eskom and consumers if the assumptions underlying the revenue decision turn out to be incorrect in reality.

Moneyweb previously reported that, despite the fact that the court ruling only covered one year, Nersa chose to address Eskom’s income distribution for both 2023/24 and the next year at the same time.

Its electricity subcommittee made a recommendation to the energy regulator late in November for an amount that, according to an open meeting discussion, differed little from what Eskom requested for primary energy, international purchases, the environmental levy and carbon tax, and research and development.

While no figures were provided, it was evident that the permission contained a significantly enhanced supply for diesel to power Eskom’s open-cycle gas turbines.

It was evident that authorities were unable to limit the income and consequent tariff rise much because to many adverse court judgements in which Eskom successfully contested Nersa’s tariff assessments.

At that point, the regulator was anticipated to make a judgement based on the advice, but the item was pulled off its schedule.

The subcommittee and officials convened a workshop on December 14 but were unable to write a fresh recommendation that incorporated the suggestions supplied by regulator members. They requested extra time, which was granted – though full-time regulator member for energy Nhlanhla Gumede reminded everyone that the court deadline of December 24 must be reached.

Nersa, on the other hand, requested an extension, which was granted on Tuesday (20 December) with barely four days to spare.

Eskom did not oppose to the plea to have the decision finalised by January 12, therefore it was made a court order.

The application of Eskom

Eskom stated shortly after 18:00 on Tuesday night that it will return to Stage 6 load shedding after easing to Stage 5 earlier in the day. . “The breakdown of 6 generating units during the day has necessitated the escalation in the loadshedding stage,”  Eskom spokeswoman Sikonathi Mantshantsha said in a voice message. At 05:00 on Wednesday, it was scheduled to be downgraded to Stage 4.