In a shock transfer, power regulator Nersa’s electrical energy sub-committee (ELS) on Tuesday determined to lengthen its imminent stakeholder consultations on Eskom’s tariff past the following monetary 12 months to embrace these for 2024/25 as nicely.
(Eskom desires a complete improve of 32.66% in 2023/24 and an extra 9.63% in 2024/25.)
This was accomplished to give certainty to electrical energy customers concerning the tariff path for the following two years and as a risk-mitigating measure in case the brand new tariff methodology Nersa has proposed isn’t finalised by 30 September.
The determination, nonetheless, stopped quick of any dedication to base the tariff willpower on the present Multi-Year Price Determination methodology (MYPD4), because the regulator appears to be holding its choices open.
This comes towards the background of calls by stakeholders to lengthen the month given for remark on the proposed methodology. The deadline is 29 July
At a latest public workshop Nersa full-time member for electrical energy Nhlanhla Gumede stated there isn’t a time to waste in finalising the brand new methodology as the present one is now not acceptable.
He didn’t reply a query concerning the implementation date Nersa is working in the direction of.
Approval of session paper
The assembly on Tuesday was held to approve the session paper on the tariff willpower for 2023/24 that Nersa should publish on 1 August on the newest, in accordance to an order of the High Court in Pretoria.
The order follows a tariff debacle that began with Nersa’s rejection of Eskom’s software for the fifth multi-year willpower (MYPD5) masking the three-year interval 1 April 2022 to 31 March 2025, as a result of it was primarily based on MYPD4.
Nersa held that MYPD4 was now not legitimate because it was linked to the earlier tariff interval and anticipated Eskom to tweak its software on the premise of rules that will underpin a strategy that will be developed sooner or later.
Eskom obtained an pressing court docket order that compelled Nersa to course of the 2022/23 tariffs in accordance with MYPD4, which it did.
It additionally persevered with an software to have the rejection of its software reviewed and put aside.
Recently Eskom and Nersa reached an settlement that was made an order of court docket early in July, for Nersa to publish the applying for 2023/24 by 1 August for public remark and attain a choice by 24 December, following MYPD4.
Court’s stance on tariff willpower
Regarding the tariff willpower for 2024/25, the court docket decided “if Nersa publishes a new pricing determination methodology and reviews all other related regulatory requirement[s] for the industry by 30 September 2022, Eskom shall submit a revised 2024/25 revenue application by no later than 1 June 2023 to Nersa for consideration and approval by 20 December 2023”.
This appears to be the rationale for Nersa’s reluctance to lengthen the remark interval for the brand new methodology. It hoped to meet the 30 September deadline.
Even if the methodology itself is finalised by 30 September, Nersa may even have to fulfill the requirement to evaluate “all other related regulatory requirements” by the identical date.
Eskom just lately listed at the least 9 paperwork that licensees are certain to, that should be reviewed earlier than a brand new methodology may be carried out. These embrace the South African Grid Code and the South African Distribution Code, the Minimum Information Requirements for Tariff Applications, the Eskom Retail Tariff and Structural Adjustment Methodology and the Regulatory Reporting Manual.
It isn’t clear if any work has been accomplished on this regard but.
Lively discussions
During the ELS assembly Gumede stated except the brand new methodology is finalised by 30 September, Eskom can be unable to put together its 2024/25 software on that foundation.
Nersa’s full-time regulator member for piped gasoline Nomfundo Maseti requested why the applying needs to be handled in a piecemeal method.
She advised that it’s the truth is one multi-year software that needs to be handled in phrases of the present methodology.
Maseti warned that suspending the choice on the outer 12 months could as soon as once more depart Nersa in a state of affairs the place the brand new methodology isn’t prepared when anticipated.
Nersa full-time regulator member for petroleum pipelines Muzi Wiseman Mkhize requested whether or not the 30 September deadline is achievable and warned towards implementing it whereas there are nonetheless many questions on it.
He stated processing the applying for each years could give Nersa “breathing space” to take a look at the proposed methodology “with fresh eyes” and a chance to rethink something “drastic” in it.
Compromise
Gumede, who chaired the assembly, was not in favour of the course of motion and through a dialogue Mkhize tempered his proposal, saying the session on each years can go forward, and if the 30 September deadline is met, Nersa can nonetheless at that stage change to course of the applying for the outer 12 months in accordance to the brand new methodology.
Maseti questioned whether or not that can be lawful.
After a 40-minute caucus the assembly reconvened and members voted in favour of a choice to proceed with session on the purposes for each years.
Gumede was the one member who voted towards the choice.
The publication of the session paper is anticipated inside the subsequent few days.
This article initially appeared on Moneyweb and was republished with permission.
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