Commenting on behalf of local business the Nelson Mandela Bay Business Chamber welcomed the National Energy Regulator (Nersa)’s decision to reject Eskom’s application to hike electricity tariffs by an additional 9.58%.
Mandela Bay Business Chamber CEO Kevin Hustler said; “It is good news for businesses in Nelson Mandela Bay that Nersa declined an application by Eskom to raise the price of electricity from July 1 (Wednesday), particularly in the current economic climate when we can ill afford another hike at this point in time.
“This is a triumph on behalf of organised business and the citizens of the country and most definitely for this Business Chamber who has doggedly pursued any opportunity to protect their members and the broader business community in Nelson Mandela Bay by submitting position papers and attending all public hearings availed to them over the past decade.
“We certainly feel vindicated by the outcome of Nersa’s rejection. We wish to acknowledge and appreciate the hard work and dedication of our Strategic Resources Task team and the leadership of the Business Chamber in pursuit of the objective of ensuring minimum impact on our economy and sustainability and competiveness of our businesses.
“This follows last week’s Nersa public hearings at the Nasrec Expo Centre in Johannesburg, which was attended by a delegation representing the Nelson Mandela Bay Business Chamber. Both Nelson Mandela Bay Business Chamber Strategic Resources Task Team Chairman Angus Clark and Deputy President MC Botha presented in opposition of higher electricity tariffs at the public hearings.
“We do not believe, however, this is a long-term solution and encourage business and citizen alike to pursue more sustainable renewable energy solutions for their business and homes.”
Earlier today the National Energy Regulator (NERSA) rejected Eskom’s selective reopener of the third Multi-Year Price Determination (MYPD3) Open Cycle Gas Turbines (OCGTs), which would have resulted in a total price increase of 25.3% for 2015/16.
This was announced by NERSA Chairman Jacob Modise in Pretoria.
He said the energy regulator has assessed the application and reached the decision based on the information and performed analysis. The rejected application includes Short Term Power Purchase Programmes (STPPPs) and the impact of the increase in the environmental levy.
The 25.3% price increase would consist of the 12.69% already approved by the energy regulator, the 10.10% selective reopener for OCGTs and STPPP, and 2.51% changed in environmental levy by 2c per kWh.
Modise said NERSA has found the application did not comply with the requirements of the Municipal Finance Management Act and Municipal System Act, in that less than 40 days was given to National Treasury and South African Local Government Association (SALGA) for comments.
Eskom submitted its application to the energy regulator on 30 April this year, which led to NERSA conducting a two-day public hearing last week.
Modise said about 30 presentations were made during the hearing by small users, intensive users, civil society organisations, political organisations, trade unions, environmental activists and private individuals.
Following issues raised at the hearing, Modise said Eskom’s price increases would result in company closure, job losses, and loss of essential skills and capacity in the economy.
“NERSA should seriously consider awarding only a small portion of the OCGTs funding request, forcing Eskom to make use of the Demand Market Participation (DMP) system already in place.
“Experience indicated that Eskom does not make sufficient use of DMP during winter high season periods,” said Modise, reading a list of key issues raised at the hearing.
Modise advised that Eskom make adjustments in the allowed revenue in accordance with the MYPD methodology, or submit a new application for the period 1 April 2016 to 31 March 2019 with indicative projections for the period 1 April 2019 to 31 March 2021.
“The door is not closed to Eskom, it can submit a detailed application,” he said.
He said NERSA considered that it is enjoined when making a decision to be consistent with the Constitution of South Africa 1996 and all applicable laws.
“The application did not provide the mechanisms on how the proposed increase, if granted, can be implemented in the current financial year in a manner that is consistent with the requirements of the Municipal Finance Management Act, 2003 (Act No. 56 of 2003).
“Furthermore, any mid-year (additional) price increases to the bulk price increase for the 2015/16 financial year cannot be considered as Section 28(60 of the MFMA, prescribes that a municipal tax or tariffs may not be increased during a financial year, i.e. after 1 July 2015,” said Modise.
He said the application does not align with the credible long-term planning and certainty that the MYPD seeks to achieve, and it actually works against such.