Tuesday, 28 July 2020 21:07

Photo Credit:Waldo Swiegers.

The Johannesburg High Court has reviewed and set aside a decision by the National Energy Regulator of South Africa to deduct a R69-billion equity injection from the power company's allowable revenue for the current three-year period, instructing instead that the full amount must be reinstated to the embattled utility's allowable revenue for the next three years. 

In the judgment, judge Fayeeza Kathree-Setiloane ruled on Tuesday that the National Energy Regulator of SA (Nersa) “got it horribly wrong” and acted unlawfully when including a R69bn equity injection from the government in its calculation of Eskom's allowable revenue for 2019 to 2022.

This, in turn, will impact Eskom's tariff increase application for the three-year period to 2022 - meaning it can charge a higher tariff. 

"There is simply no way for the harm caused by Nersa's 2019/22 decision, to be rectified other than by reinstating the misappropriated R23 billion in each of the next three available financial years," read the judgment.

The court ordered that the average standard Eskom tariffs approved by Nersa for the 2021/2022 financial year would be increased by from 116.72 c/kWH to 128.24 c/kWh. 

The R69 billion over the next three years was allocated to Eskom in the 2019 Budget to help the ailing state-owned power generator service its skyrocketing debt.

Eskom had argued that Nersa treatment of the equity injection, which was converted into tariff subsidies for electricity consumers, was unlawful, and placed its finances in jeopardy. It had further stated that the reason why government support was necessary was because Nersa's tariffs decisions had resulted in cash from operations being insufficient to service its debt.

The court noted the risk posed by a potential collapse of Eskom' s finances, saying it would have a "catastrophic consequences" to the state coffers.

Eskom welcomed the High Court decision that allows for phased recovery of the R69bn equity injections.