South African state-owned electricity utility Eskom has started legal proceeding against the latest tariff rise decided by the National Energy Regulator of South Africa (NERSA), arguing that the regulator failed to comply with the Electricity Regulation Act and the multiyear price determination methodology.
In March 2019, NERSA authorised Eskom to increase its tariffs by 9.4%, 8.1% and 5.2% over the next three years. The company, which was seeking a much higher increase, considered that this moderate tariff hike would lead to a planned revenue shortfall of around ZAR100bn (US$6.7bn). In addition, Eskom claims that this decision has offset a ZAR23bn (US$1.6bn) bailout it obtained from the South African government.
Eskom’s debt reaches ZAR450bn (US$30.5bn), mostly because the company financed the construction of two large coal-fired power plants, Medupi and Kusile. The utility considers its financial situation is also a consequence of low tariffs, fixed by the regulator at a level inferior to its costs.