The Nelson Mandela Bay Business Chamber was the only organization of its kind in South Africa to do a presentation at the Thursday, August 6 public hearing by the National Energy Regulator of South Africa (NERSA) on its Cost of Supply (COS) Framework.
The purpose of the hearing was to get public input on the proposed COS Framework to be used by licensed electricity distributors in South Africa. The Framework will be a guide to licensees when developing their COS studies, which will ultimately determine the price of electricity paid by businesses and citizens in Nelson Mandela Bay, and the rest of the country.
The Nelson Mandela Bay Business Chamber has played an active role in protecting businesses’ interest in relation to electricity tariffs. It is the second time that the Chamber presents at a NERSA public hearing in less than two months, following the presentation at the public hearings on Eskom’s selective reopener application – which was subsequently rejected.
David Mertens, representing the Nelson Mandela Bay Business Chamber today, was the first to do a presentation following a presentation by Eskom at the public hearing in Johannesburg. He was one of only three other presenters from the business community to address NERSA on the topic, saying that the current system is in particular jeopardising the sustainability of energy-intensive industries.
While the Business Chamber supported the proposed COS Framework, several improvements were proposed by Mertens, including – amongst others:
- Distributors of electricity not supplying audited financial statements should not qualify for annual tariff increases;
- Ring-fenced and audited electricity accounts are specifically required;
- The Framework must explicitly ensure monies are not disappearing to non-related expenses;
- Reasonable returns must be limited to returns on capital funded by the licensee;
- Cost reduction plans must be an essential function of electricity distributors; and A solution for industry winter tariffs should be found.
“Winter months energy costs are a substantial problem for industry and specifically the peak tariffs. These tariff structures are destructive for heavy industry running continuous operations and simply unaffordable,” Mertens said.
By implication the winter energy costs also impact heavily on the retail sector and many SMMEs. Mertens requested NERSA to evaluate this situation and find solutions to properly allocate peak charges to customer categories responsible for peak usage.
Following Thursday’s public hearing, NERSA will make a decision on the proposed COS Framework on September 30.
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