OUTA formed an “Energy Panel”

OUTA’s first engagement on the Eskom issue, was to appoint Energy Analyst Ted Blom, to assist in identifying the main reasons and causes for the high price of electricity in South Africa. Blom’s responsibility was to identify any inefficiencies within Eskom, as well as, the causes thereof.

In addition to Mr Blom’s appointment, OUTA assembled an advisory “Energy Panel” to provide input to the OUTA Board, on matters relating to the country’s Energy Policy, Energy Laws, and the conduct of individuals and organisations within the Energy field.

OUTA’s Input to NERSA

OUTA was represented by Ted Blom in its presentation at the NERSA hearings on 18 February, 2016. He requested NERSA to not grant any electricity increases without being able to objectively satisfy itself; to which extent Eskom generated, transmitted and distributed electricity efficiently; and to adequately assess the impact on the economy. Should Eskom implement the price of electricity at current increase levels requested.

OUTA subsequently, upon further invitation, Blom addressed NERSA regarding the impact of the asset valuation methodology used by Eskom on the price of electricity, as well as a variety of other factors influencing the price of electricity in South Africa.

OUTA commissioned research

OUTA has since commissioned a research team to conduct assessments and benchmarking studies, on the costs of international electricity generation, in relation to the affordability and the environment of energy generation in South Africa. This will be combined with other research on the direct and indirect rising cost of electricity prices in South Africa and the impact it has on the economy.

OUTA’s preliminary investigation indicates:

  • The costs of coal and diesel paid by Eskom are excessive
  • It is probable that Eskom’s asset values are being incorrectly and over valuated, resulting in higher electricity tariffs

It appears that NERSA deem the 8% per annum increase granted to Eskom as an unconditional 8% increase. OUTA is of the opinion that this interpretation is unlawful, as it would result in the regulator not being able to apply its mind if information surfaced indicating that a tariff increase of less than 8% is justifiable, or even a decrease in tariffs.

OUTA seeks transparency and input on all matters pertinent

OUTA will request and seek to obtain information from Eskom, pertaining to:

  • All contracts Eskom has with the suppliers of coal, diesel and transport, and analyse these to ascertain who may be potentially benefiting from inflated prices of goods and services, and what the impact on the public is.
  • Bid documentation resulting in the appointment of the persons providing diesel and coal
  • Obtain and analyse performance information regarding the generation, transmission and distribution of electricity by Eskom, in order to be able to determine whether the costs of electricity generation, transmission and distribution can reasonably be passed onto consumers

Should this information not be forthcoming from Eskom, OUTA will launch a Promotion of Access to Information Act (PAIA) application, and if further refused, OUTA will contemplate legal action to obtain this information.

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