Eskom notes Nersa decision

Thursday, June 14, 2018

Eskom says it has noted the National Energy Regulator of South Africa’s decision to grant it a R32.69 billion approval for its Regulatory Clearing Account (RCA) applications.

Nersa made the announcement at a media briefing in Tshwane earlier today for the RCA for the years 2015, 2016 and 2017.

“Eskom has noted the decision and will give a detailed comment once the reasons for the decision have been shared by Nersa,” said the utility’s acting Chief Financial Officer Calib Cassim.

The power utility’s applications to the regulator had totalled R66.6 billion.

“We made the application guided by the principles embedded in the multi-year price determination (MYPD) methodology in making regulatory clearing account (RCA) applications. We adhered to these principles and in addition, we applied the principles of the Nersa RCA decision on our RCA application for the first year of the MYPD 3 period in 2016.

“We will be able to fully understand the basis of the decision once we have gone through the reasons for the decision,” said Cassim following the announcement.

In January, Nersa published for public comment Eskom’s third multi-year determination (MYPD3) Regulatory Clearing Account (RCA) applications.

The regulator has decided on the following with regards to the applications:

1.1. an RCA balance of R12.577 billion for the 2014/15 financial year;

1.2. an RCA balance of R12.058 billion for the 2015/16 financial year; and

1.3. an RCA balance of R8.055 billion for the 2016/17 financial year.

The funds will be recoverable from the standard tariff customers, local Special Pricing Agreement (SPA) customers and international customers.

In May, Reserve Bank Governor Lesetja Kganyago said the applications pose an upside risk to the bank’s inflation forecast.

At the time of the announcement of the Monetary Policy Committee’s decision to keep the repo rate unchanged at 6.5% per annum, Kganyago said the bank’s current assumption was for an 8% increase from mid-2019, followed by another increase in 2020.

“The possibility of an increase in excess of these assumptions poses an upside risk to our inflation forecast,” Kganyago said at the time. -