RESPONSE TO MEDIA ARTICLE TITLED ‘CONSUMERS TO PAY FOR NERSA’S R100 BILLION MISTAKE’
The National Energy Regulator of South Africa (NERSA) would like to correct the factually incorrect information contained in an article titled ‘Consumers to pay for NERSA’s R100 billion mistake’ published by Rapport and the City Press on 28 June 2020.
Firstly, the article incorrectly stated that ‘NERSA has conceded to making mistakes in calculations of tariffs to two court applications brought by Eskom’. This statement is factually incorrect, as there were no mistakes in the calculations as inferred in the article and NERSA did not accede to any calculation mistakes.
Secondly, the article incorrectly stated that ‘consumers may pay R100 billion for NERSA’s mistakes’. This statement is also factually incorrect. NERSA may not be privy to City Press and Rapport’s calculations or assumptions in arriving at the R100 billion that they allege ‘consumers may pay’, but as the most competent entity to determine Eskom tariffs, this number makes absolutely no sense.
Thirdly, NERSA has acknowledged procedural unfairness when considering certain components of Eskom’s fourth Multi-Year Price Determination (MYPD4) application and the three Regulatory Clearing Account (RCA) applications by not affording Eskom a greater opportunity to comment on its finding before finalising the applications. It is important to indicate that this approach had been taken in the context of striking a fair balance between the interests of customers, licensees and investors in the electricity supply industry, ensuring regulatory independence, and minimising the risk of possible regulatory capture, perceived or otherwise.
Based on the recognition that this approach was not optimal, there was an agreement between NERSA’s Full-Time Regulator Member responsible for electricity regulation and Eskom’s Chief Executive Officer (CEO) to improve the level of engagement to ensure better regulatory outcomes. In this regard, it was decided to start a process between NERSA and Eskom aimed at settling matters outside of the court process. However, it seems that vested interests in the matter won the day and the matter was brought to court.
NERSA has requested the court to remit the MYPD4 decision and the three RCA’s to be concluded on the papers. The judgement on the MYPD4 decision is reserved and judgement on the RCA matter was delivered on Monday, 29 June 2020. The court has reviewed and set aside the decisions of the Energy Regulator on the three RCA applications, as had been proposed in the out-of-court settlement. NERSA is currently studying the judgment on the RCA matter and will consult with its stakeholders in due course.
NERSA remains committed to its regulatory principle of being transparent in its decision-making process and assures all stakeholders and the public that its decisions are made in accordance with the law and in an effort to strike a fair balance between the interests of customers, end-users, licensees and investors in the electricity supply industry.
Mr Charles Hlebela
Head of Communications
Tel: 012 401 4600
Fax: 012 401 4700
Cell: 083 646 8280