National Energy Regulator of South Africa (Nersa) full-time member for electricity Thembani Bukula says the regulator is not anticipating an approach by Eskom for a “reopener” of the current tariff determination, notwithstanding National Treasury’s indication that “government will support Eskom’s application to Nersa for tariff adjustments in line with the regulatory process”.

The National Treasury made the comment in a recent statement outlining a Cabinet-endorsed package to close Eskom’s funding gap, which has been estimated at R225-billion.

Included in the package is a plan for a further equity injection, the details of which are due to be announced by Finance Minister Nhlanhla Nene during the Medium-Term Budget Policy Statement, which will be released on October 22. Finance for the injection is to be raised from “leveraging non-strategic government assets”.

But the statement also stresses that tariff adjustments “remain the key mechanism that will provide the electricity supply industry with a sustainable solution, meaning that it will provide Eskom with the revenue and cash flows the utility needs to complete the current programme of building power stations, repay debt and interest thereon”.

Bukula, however, tells Engineering News Online that the current focus is on the Regulatory Clearing Account (RCA) mechanism, rather than reopening of the third multiyear price determination (MYPD3), under which Eskom has been granted yearly increases of 8% for the five-years from April 1, 2013, to March 31, 2018. The utility applied for yearly increases of 16%.

Nersa has already determined that Eskom is entitled to recover additional revenue for the MYPD2 period, covering the three-year horizon from April 1, 2010, to March 31, 2013.

Bukula says that Nersa is planning to make a determination in September regarding the way the MYPD2 claw-back will be distributed.

He indicates that it is working on various options, including allowing for full recovery in a single year, or spreading it over a number of years.

“But you must remember that it was really a deficit of one year, when Eskom decided, for whatever reason, to give away 10% – that needs to be corrected . . . [and] we are leaning towards correcting it in one year.”

Bukula is referring to the lowering of Eskom's power tariff increases for the period April 1, 2012, to March 31, 2013, from the 25.9% approved previously to 16%, following an Eskom application to provide such relief.

It is anticipated that the RCA determination will affect tariffs from April 1, 2015.

Bukula did not comment on the likelihood of further RCA applications relating to the MYPD3 period. “[But] we are not expecting an approach by Eskom to [reopen].”