CRAZY NONSENSE: S.African Inefficiency: Expect electricity power price hikes

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The National Energy Regulator of South Africa (Nersa) has received another setback in court, with Judge Jody Kollapen issuing an interim order on Friday for the organisation to process Eskom’s tariff applications for 2022/23 that were submitted in June.

However, the City Press reports that Nersa plans to continue its battle with Eskom to apply its preferred principles over the 2023/24 period — and this could result in increased electricity prices.

This is because Nersa would need to compensate Eskom for higher risk if it persists with its plans, Advocate Matthew Chaskalson SC warned on behalf of Eskom.

Judge Kollapen issued his interim order after agreeing with Eskom’s argument that the existing methodology can only lapse if Nersa replaces it with something else, as failing to do this would leave a vacuum — which would be illegal and impractical.

Nersa proposed that Eskom repackage its applications relating to three principles it had outlined. However, Kollapen noted that these principles were vague and could be interpreted in several ways — particularly in comparison to the original pricing methodology, which contained 40 pages of instructions.

Kollapen ordered Nersa to publish Eskom’s tariff application by Wednesday for public comment.

Eskom logo load shedding

Load-shedding returns

The idea of increased electricity prices will not be welcomed by South Africans, especially while Eskom continues to implement load-shedding.

Most recently, Eskom announced that load-shedding would take place from 21:00 on Saturday until 05:00 on Monday.

This was due to a series of issues at Eskom’s power plants, including the failure of a generation unit each at Kusile, Medupi, and Arnot power stations, the delay of a unit returning to service at Tutuka power station, the failure of coal conveyors at Medupi power station, and the complete shutdown of the Kendal power station ash plant.

“Total breakdowns have increased to 14,727MW while planned maintenance is 6,711MW of capacity as we continue with the reliability maintenance,” said Eskom.

Sir Mick Davis, former Eskom financial chief

In the wake of Eskom’s struggles, its former financial chief, Mick Davis, recently said that Eskom should bring back skilled workers who have left the country to train its current technicians.

Davis, who is now a British politician, noted that Eskom had suffered major issues because of ongoing mismanagement, a lack of skills, and significant corruption.

“Running a power system is an art, not a science. It needs a huge amount of skill base. It needs people with experience,” Davis said.

“I strongly believe that one of the ways of getting that experience is to go around the world and tap into the best operators you can find … and bring them in for a three year period.”

He said there is no reason why Eskom cannot return to being a credible and reliable supplier of affordable electricity, and argued this could be achieved within ten years.

Davis also said that he admires current CEO Andre de Ruyter, including “the battle he is fighting, and the initiatives he is taking.”

However, Davis added that “he cannot be successful unless there is a purposeful response by the government to do the right thing.”

Source: https://mybroadband.co.za/news/energy/426166-expect-eskom-power-price-hikes.html

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