Eskom in court bid to claw back R29 billion by increasing electricity prices

Eskom says it will continue to fight the National Energy Regulator of South Africa (Nersa) in court, until a host of financial issues have been resolved.

It’s been an intensely busy start to the year for Eskom. From maintenance calamities embattling infrastructure, leading to a dire shortage of capacity and debilitating load shedding schedules, to new CEO Andre de Ruyter taking the reins in an attempt to stabilise the utility’s turbulent management. While the threat of rotational cuts still loom, a different, yet not altogether unrelated, battle looms in the courtrooms of South Africa.

In an unprecedented move, Eskom has instituted fierce legal action against Nersa in an attempt to bolster its coffers and avoid complete financial failure. Two challenges have already been heard by Pretoria High Court in January.

Eskom challenges Nersa in multiple court bids

In the first instance, South Africa’s beleaguered power supplier argued that Nersa had acted ‘irrationally’ by refusing to allow a R69 billion government be built into electricity tariffs which would target municipalities. Eskom claims that Nersa’s current tariff determination has resulted in an allowable revenue shortfall of R173 billion.

While Nersa has argued that its tariff determinations were fair and well-considered, Eskom contends that it should be afforded a 17% increase from March 2020. Eskom’s legal representative, Matthew Chaskalson, noted the urgency of the application following the court’s move to reserve judgement, saying:

“Genuinely, it is a national crisis… there is a very real risk that if we have to wait until the start of 2021/2022 financial year, the country may have collapsed by then.”

Eskom wanting to drastically increase electricity tariffs

On Monday, the court, once again, heard arguments from Eskom as part of its on-going tariff dispute. The power utility claimed that Nersa’s determination processes for the 2018/2019 financial year violated the Electricity Regulation Act and the Electricity Pricing Policy. Chaskalson picked apart Nersa’s single-year tariff determination of 5.23%, arguing that the regulator was duty-bound to approve the 19.9% increase which Eskom had originally applied for.

Eskom alleges that, because of Nersa’s flawed methodology, it lost R29 billion in revenue.

On Tuesday, Nersa is due to provide counter-arguments before the Pretoria High Court.

The Regulator has also instituted a public hearings process concerning Eskom’s attempts to raise electricity tariffs. The nationwide hearings centred upon Eskom’s 2018/2019 regulatory clearing account application are due to begin in Cape Town on 3 February.