Eskom prepares for showdown with regulator on tariff increases

Eskom’s CEO Brian Dames still remains tight-lipped on exactly how much the state utility will be asking for in electricity tariff adjustments upwards in its third multi year price determination period (MYPD) application to the National Energy Regulator (Nersa) next month, although an “unofficial” release is circulating that a figure of 14.6% over each year for five years is on the cards.

Confirming that Eskom acknowledged that the cabinet clearly expected “moderation”, the utility says it has “taken on board” the idea that an application for a period longer than the three years under the current MYPD needs to be projected, this suggestion also being made to the minister of energy by the relevant portfolio committee of the department of energy’s budget vote response and it’s presentations on future energy reserves and cost.

However, finance director Paul O’Flaherty, who also addressed the public enterprises committee recently on the subject of financing the current Eskom infrastructure development, has said next month’s MYPD application will also be in the a context of its R340bn investment programme which will attract to Eskom an interest bill of R120-billion over a five-year period.

This five year interest period has by necessity to be brought into the discussions with Nersa, he said, and will mainly account for the need to consider extend the MYPD over a longer period. O’Flaherty referred to the fact that Eskom’s ability to raise the capital and to handle long term debt was inextricably linked to South Africa’s sovereign rating.

 

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