SA’s biggest energy users oppose Eskom cost claw back

South Africa’s biggest energy users have opposed an application by state-owned Eskom to claw back costs because the overruns were caused by factors within its own control.

“Eskom’s poor strategic choices cannot forever be made a burden for consumers,” Fanele Mondi, CEO of the Energy Intensive Users Group, told the regulator in response to the utility’s claim. Its members include Anglo American and Glencore and account for about 40% of the nation’s electricity consumption.

The failure by Eskom to meet electricity demand has resulted in record nationwide blackouts that occur nearly every day and crimp the economy. The loss-making company is in equally dire financial shape and has relied on government bailouts in order to service its debt.

Eskom can apply to the National Energy Regulator of South Africa to claw back unforeseen expenses through its so-called regulatory clearing account. That process includes public hearings followed by a decision from Nersa that indicates how much can be recovered through a tariff increase.

Of the R23.8 billion ($1.3 billion) that the utility is applying to recover from the 2022 financial year, no more than R1.1 billion should be granted, Mondi wrote.

“Eskom seems to believe that its operational performance is due entirely to external forces, such as delayed government decisions, Nersa not granting its requests, the Russia-Ukraine conflict and lower electricity consumption,” he said. “Poor performance is the significant contributing factor to lower consumption and sales.”