Eskom has overspent an estimated R286 billion on primary energy costs over the past seven years.
This is according to the Organisation Undoing Tax Abuse (Outa) as it objects to Eskom’s Regulatory Clearing Account (RCA) applications to the National Energy Regulator of South Africa (Nersa) for a R66.6 billion revenue claw-back. The organisation has suggested a zero recovery on the grounds that Electricity Regulation Act stipulates that only an efficient utility is entitled to acquire a return on its operations for regulatory purposes says Ronald Chauke, Outa’s Energy Portfolio Manager. “Eskom is clearly not an efficient organisation and Outa believes that if Eskom’s leadership applied prudent primary energy procurement and strong auditing practices, the primary energy expenses incurred by Eskom over the past seven years should be around R286 billion lower than they are.”Spot prices should not impact overall coal bill
Outa’s research reveals that the average cost of primary energy has increased by 347%, from an average of R18.7 billion per annum (2007 – 2009) to R83.6 billion per annum during the RCA application period.
“We are aware that Eskom procures most of its coal requirements through long term and ‘cost-plus’ contracts, indicating that the spot prices should not impact the overall coal bill, as Eskom disclosed in its application,” says Chauke.
