Eskom’s acting CEO Brian Molefe was put under the spotlight by the National Energy Regulator of South Africa (Nersa) on Tuesday, as he requested a tariff increase to curb load shedding and to increase maintenance on its power stations.
The Nersa panel challenged Molefe on various issues that he did not have answers to and at one point he remarked that “I am still new at Eskom”.
Nersa had possession of a concerning letter from Eskom to national treasury as well as a report from Eskom that showed worrying signs about the longevity of Eskom’s fleet of power stations, which Molefe had not seen before. They compromised to let him see the documents and to respond later in the day.
Molefe told the public hearing regarding the MYPD3 Selective Re-opener that while Eskom had already been granted a 12,7% tariff increase for 2015/2016, Eskom desperately needed a further increase due to the new build delays as well as its ageing fleet.
He said open cycle gas turbines (OCGTs), which produced 2,4GW to minimise the severity of load shedding, was a money burner that required R10,9bn/year. This contributed to the additional 6,4% tariff increase he was now requesting on top of the 12,7% increase.
Molefe said Eskom was also entering agreements for the short-term power procurement programme to add further generation capacity to help ease load shedding, which cost around R5,3bn/year. This contributed to the additional 3,1% tariff increase.
Then, Molefe said that if the environmental levy increase is gazetted, then it would need a 2,5% additional tariff increase as a “pass through of levy costs”.
The total new tariff increase would then total 24,8%.
After Eskom’s presentation, the Nersa panel started listening to submissions from a variety of stakeholders, many who are opposing Eskom’s tariff increase.
Nersa will make a decision regarding the increase at the end of the month, but the implementation of the possible increase won’t take effect in July. — Fin24
