The Gauteng Excessive Court docket has put aside the Nationwide Vitality Regulator of South Africa’s (Nersa’s) most up-to-date analysis of Eskom’s regulatory asset base (RAB), a call that has potential important implications for a pending tariff dedication.
The State-owned utility took the regulator’s RAB determination on authorized evaluate after Nersa greater than halved Eskom’s RAB to R551-billion relative to the R1.25-trillion outlined in its income utility for the 2022/23 monetary 12 months.
The reduce within the RAB contributed to the Vitality Regulator’s determination to approve a 9.61% hike for 2022/23, which was lower than half the 20.5% hike for which Eskom had utilized.
Whereas the order may have no retrospective impact, the court docket has instructed Nersa to re-determine Eskom’s RAB for subsequent years, with implications for the tariffs to be utilized in 2023/24 and 2024/25.
That tariff determination, which is presently beneath adjudication by Nersa following current public hearings, was initially anticipated by November 7, however the regulator has till December 24 to make a dedication in step with a timeline stipulated in a separate court docket order.
Eskom has utilized for a 32% hike from April 1; a rise that features 10.67% to “appropriate” the depreciation determine that was affected by the reduce of the RAB, in addition to an extra 2.85% to “appropriate” the return on property quantity.
The precise consequence will rely on what Nersa determines the RAB to be, nonetheless.
The Excessive Court docket order additionally outlines the particular steps that the regulator must take to re-determine the 2022/23 RAB, together with that:
- solely commissioned property be included within the substitute value dedication and that property beneath building be valued at guide worth, excluding capitalised curiosity throughout building till they are often transferred to the commission-asset class;
- the regulator reverses a flue gasoline desulphurisation adjustment incorrectly made in its earlier determination;
- the collected depreciation adjustment be made to mirror the right remaining helpful lives of the facility stations to make sure that they don’t have adverse RAB values;
- the right remaining helpful life of every energy station is used when the roll-forward depreciation is calculated;
- Nersa adjust to the multiyear worth dedication methodology with reference to power availability issue changes for Eskom turbines;
- the finished technology, transmission and distribution asset worth not included within the RAB of 2022/23 be included; and
- the guide worth, excluding capitalised curiosity throughout building, of all property beneath building be used within the RAB dedication.
As soon as the RAB worth is decided, the finished property will must be depreciated.
Within the disputed RAB of 2022/23, depreciation of R42-billion was permitted in opposition to Eskom’s request for greater than R60-billion.