No Christmas present for Eskom

Embattled consumers will now have to wait until the new year for news of what is expected to be a substantial tariff increase.

Energy regulator Nersa has been given a reprieve from the pressure to determine Eskom’s tariffs for 2024/25 – it now has until 12 January to do so.

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

Whether the utility will still make its long overdue financial results for 2021/22 public before Christmas was not yet clear on Tuesday.

Asked about reports that Eskom will hold its AGM on Friday (23 December), with a media and stakeholder briefing thereafter, the group’s CFO Calib Cassim said this is yet to be confirmed.

Eskom restated its results for 2020/21 following the appointment of new auditors, increasing its loss by 38% to more than R25 billion. It has missed the end-September legislated deadline to submit its results for the year ended 31 March 2021 as well as its self-imposed extended deadline of 30 November.

This was extended further, to December 30, but Cassim previously told Moneyweb he hopes to finalise it before Christmas.

Eskom COO Jan Oberholzer has disclosed that Eskom has already spent double its upwardly adjusted diesel budget in an effort to keep the lights on, and this is expected to weigh heavily on the numbers to be announced.

Tariff increase

Eskom has applied for a tariff increase of 32% for 2023/24 and a further about 10% the year thereafter.

Included in this amount is a R15 billion court-ordered refund of a part of the R69 billion over three years Nersa earlier unlawfully deducted from Eskom’s allowable revenue in lieu of a government equity injection of the same amount. It further included R1.7 billion, which is part of a claw-back in terms of the Regulatory Clearing Account (RCA) mechanism meant to mitigate the risk for Eskom and customers should the assumptions underpinning the revenue decision play out differently in reality.

Moneyweb earlier reported that while the court order only covered one year, Nersa decided to deal with Eskom’s revenue allocation for both 2023/24 and the following year at once.

Its electricity sub-committee late in November made a recommendation to the energy regulator for an amount that, according to the discussion at an open meeting, varied little from what Eskom asked for regarding primary energy, international purchases, the environmental levy and carbon tax, and research and development.

While the numbers were not disclosed, it was clear that the approval included a largely increased provision for diesel to fire Eskom’s open-cycle gas turbines.

It was clear that, having to adhere to several adverse court rulings in which Eskom successfully challenged Nersa’s tariff determinations, officials were unable to limit the revenue and subsequent tariff increase substantially.

The regulator was expected to make a decision based on the recommendation at that stage, but the item was removed from its agenda.

On 14 December 14 the sub-committee and officials held a workshop but were unable to draft a new recommendation incorporating the guidance provided by regulator members. They asked for more time, which was granted – although full-time regulator member for electricity Nhlanhla Gumede cautioned everybody that the 24 December court deadline must be met.

Read: Nersa kicks Eskom tariff can down the road

Nersa however approached the court for an extension, which was granted on Tuesday (20 December) with only four days to spare.

Eskom did not object to the application to have the decision finalised by 12 January, and it was made an order of the court.

Eskom’s application

Shortly after 18:00 on Tuesday night Eskom announced that it would revert to Stage 6 load shedding, having eased to Stage 5 in the morning. “The breakdown of 6 generating units during the day has necessitated the escalation in the loadshedding stage,” Eskom spokesperson Sikonathi Manthsantsha said in a voice note. It was set to be reduced to Stage 4 at 05:00 on Wednesday.