TARIFF HIKE APPLICATION
HILARY JOFFE: Meanwhile, risk from Eskom only grows
Eskom’s finances were dealt a triple blow last week, and the risk the power utility poses to SA’s fiscal position can only increase. First came the reinstatement of suspended executive Matshela Koko and the appointment of two new board members who have no commercial experience. These moves will do nothing to provide comfort to investors who have declined to lend any new money to Eskom because of concerns about its governance, as well as about its financial position. Then came the National Energy Regulator’s (Nersa’s) decision to award Eskom a 5.3% tariff increase for 2018, instead of the 19.9% the utility had applied for. A closer look at the numbers highlights the extent to which Nersa is trying to force Eskom to be more efficient and tailor its cost base to much reduced demand for electricity. It reveals too that the 5.2% isn’t really 5.2%. The way the process works is that Eskom applies for an "allowable revenue" total to cover its costs, which it has to justify to the regulator....
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