Eskom is protected at the expense of consumers, while scrutiny of the tiny details detracts from the utility’s bankruptcyBeleaguered Eskom is once again looking to the National Energy Regulator of SA to increase the price of electricity. This time it is via a mechanism called the regulatory clearing account , which allows Eskom to apply for future tariff hikes based on what happened in the past.
Given the rapidly changing energy landscape in SA, these estimations are unlikely to be accurate, as has been the pattern over the years. Nonetheless, in an initial step Eskom provides Nersa with some estimations and after deliberation, as a second step, the regulator makes allowances. Further down the track, in a third step, Eskom compares what actually happened with these allowances, and then follows the RCA rules in making its application.
As a result, if the RCA application is successful the people of SA will pay more for power supply because Eskom overspent on production and earned less than it was allowed to. This is the failure and perverse nature of the RCA. Compared with a prior guess, Eskom can claim costs related to spending more on generating electricity than was expected, but, in addition, when less money comes in this perceived shortfall is also claimed.
The irrationally of the whole RCA mechanism is overshadowed by a second, bigger problem: fundamental challenges in the electricity system are not being solved. At present, Nersa is stuck nit-picking over the details of a tariff increase, but this is a distraction from the fact Eskom is de facto bankrupt, and if it falls through the floor it will take SA with it.
For many reasons, including financial, human health, environmental and climate change imperatives, there needs to be a shift from fossil fuels to renewable energy. Moreover, this needs to be done in a fair way that applies principles of justice, particularly for workers and communities that will be affected the most by this change. Hence the term “just energy transition”. While there have been many discussions and debates on this topic in recent years, there is no plan from the government yet.
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