Energy regulator Nersa entered the controversial R54 billion settlement with Eskom earlier this year because it would help it avoid court scrutiny that could “expose Nersa further”. This was disclosed in the High Court in Pretoria on Wednesday during the hearing of Eskom’s application to review the regulator’s determination of its revenue for the current and next two financial years. Eskom initially applied to have the decision, which was announced in January, remitted to Nersa to correct mistakes it claimed Nersa made to the value of R107 billion.
Nersa, however, admitted some of the mistakes and settled the matter with Eskom for R54 billion, which they agreed would be additionally recovered from electricity tariffs over the next two years and beyond. This would account for R35 billion of the total of R54 billion, while the remaining nearly R19 billion would have to be recovered in subsequent years. The settlement was never disclosed publicly, until Moneyweb wrote about it in August.
It will only take effect if made an order of court, which is still pending. AfriForum and Minerals Council SA both applied to intervene in the matter, and their arguments against the settlement, as well as Eskom and Nersa’s argument in favour of it, were heard on 10 December. Both intervening parties referred to Nersa’s utterances in its record of decision, which shows that the settlement was at least partially motivated by a desire to cover its own tracks, rather than by the interests of Eskom or the public.
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Nersa further wanted to avoid a situation where the court issues an order that would bind it in future, thereby limiting the way it exercises its powers. It motivated the settlement as follows: “It further removes a space for a just and equitable order, which the court can determine the regulatory scope and set the decision that may have to be abided by.”
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