NERSA is in the unenviable position of trying to balance Eskom’s applications with consumer submissions.
The tariffs have risen exponentially over the last decade and have impacted on the ability of companies to operate profitably. In some cases, electricity costs are more than 50% of input costs according to the EIUG. This is untenable and unsustainable. This is driving companies to seek alternative energy supply, move operations offshore, or simply close. This is bad for the economy and also perpetuates the so-called utility death spiral for Eskom. In this light, it is true that the methodology is not fit for purpose and BUSA has long recommended its revision.
Increasing prices and pervasive price uncertainty owing both to outdated methodologies and court processes like this also erode investor confidence making South Africa unattractive.
BUSA hopes that the tariff determinations for the remaining years of MYPD4, including any outstanding RCA’s and court remittances, are dealt with efficiently, fairly, and expeditiously to give some clarity on the price path for the coming years. This is especially important in light of economic recovery efforts post-COVID 19. In parallel, BUSA strongly advises that policymakers and the Regulator review and amend pricing policy and tariff determination methodology to ensure a framework that is fit for purpose considering a diverse and distributed energy mix in the future.
BUSA CEO Cas Coovadia