mer leading public servant and now academic has described the process to determine the tariff increases for South African electricity producer Eskom as "formally dysfunctional", and has called on the National Energy Regulator of South Africa (Nersa) to recuse itself from the process and request the political authorities to make the policy decisions necessary for a tariff determination to be made.

Alternatively, the political authorities could use the information garnered from the regulator's national road show, as well as the written submissions, to make an immediate political intervention in the "national interests".

"It is far too late to panic now. It is time to simply take decisions," the University of Witwatersrand's Dr Mike Muller, who was previously the DG at the then Department of Water Affairs and Forestry, averred.

Speaking on the last day of public hearings into Eskom's request for a 35% a year tariff increase for the three-year period from 2010 to 2013, Muller described Nersa and Eskom as victims rather than the cause of the current impasse and pricing dilemma. He, therefore, urged the regulator to redirect the problem to the political authorities, which had the authority to deal with the inadequacies in the process.

Similar concerns about the current policy void were expressed by a number of other presenters, including Business Unity South Africa, the South African Independent Power Producers Association, WWF South Africa and CIC Energy. But Muller was the first to argue that the void and the lack of political decision making actually imperilled the Nersa process.

He felt particularly uneasy about the canvassing, during the public hearings, of the sale of equity positions in Eskom projects and assets, which he said had only been endorsed by Cabinet after the Eskom submission of November 31, 2009. It has also not been raised in the so-called "Issues Paper", which guided the public in their submissions to the regulator.

Muller raised questions about whether the private equity would help actually bolster electricity, and submitted that a national conversation was required on the costs and benefits of such private equity.

"There is no framework in place to evaluate the public interest and that makes it very difficult to take a decision at this time."

In an earlier submission, South African Local Government Association (Salga) chairperson Amos Masondo, who is also the executive mayor of Johannesburg, said it was concerning that Eskom had to prepare its application with "little or no clarity on country choices". These were supposed to be guided by the integrated resource plan (IRP), the first anaemic version of which was only published on December 31, 2009.

Eskom submitted the second version of its application on November 30, 2009.
WWF-SA's Peet du Plooy even questioned the whether the IRP was "valid and legal", owing to the fact that the three-page document appeared to breach a number of stipulations in the Energy Act of 2008.

In his submission, the South African Independent Power Producer (IPP) Association's MD Doug Kuni argued that the prevailing monopoly power-supply framework "maximised the risk" and would have to be overhauled for that risk to be mitigated.

But he, too, acknowledged that Nersa was stymied by policy, over which it had not authority, including policy to open the sector to IPPs.

"We are where we are, because the consumer has no choice and Eskom has no competition, and there is no institutional model to facilitate entry of IPPs," Kuni asserted.

Similarly, the Chamber of Mines warned that, in the absence of a final IRP, Nersa should refrain from making any decisions that will prejudice future choices.

Techno Economics Assistant Adviser Dick Kruger said that despite the lack of certainty on the eventual structure of the electricity supply industry, Eskom had developed a funding and pricing proposal that would have material implications for the structure of the industry and the industrialisation prospects of the South African economy over the next few decades.

"Incorrect decisions made about pricing for Eskom in the short-term could entrench the monopoly position of Eskom and limit the country's electricity supply and market structure choices in the medium and longer term," Kruger cautioned.