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South African court sides with Eskom in clawback dispute

JOHANNESBURG (Reuters) – South Africa’s High Court on Monday sided with Eskom in a dispute over the amounts energy regulator Nersa allowed the state utility to claw back from customers for electricity supplied in the 2014/15, 2015/16 and 2016/17 financial years.

Nersa’s 2018 decisions to allow Eskom to recoup 32.69 billion rand ($1.9 billion) via a mechanism known as the regulatory clearing account (RCA) for those three years have been set aside, and it must now come up with new decisions.

Monday’s ruling could lead to higher power tariffs, as the court said it appeared Nersa had disallowed Eskom money for lower-than-forecast revenue based on a “fundamental factual error”. It said disallowing some coal costs was not rational.

Higher tariffs would pile pressure on cash-strapped households and business buckling under the impact of the COVID-19 pandemic, but they would be a relief for Eskom, which is mired in financial crisis and has long said the regulator has treated it unfairly.

The RCA mechanism is designed to account for differences between Eskom’s forecast revenue and costs when it applies to Nersa for power tariffs and the actual revenue and costs it subsequently reports.

Eskom had sought 66.6 billion rand in RCA balances for 2014/15, 2015/16 and 2016/17 and said in court papers that Nersa had disallowed it amounts for lower-than-forecast revenue, coal costs, independent power producer costs and capital expenditure when it should not have.

Nersa had said it would oppose Eskom’s application but did not file an answering affidavit and later advised via its lawyers that it was withdrawing its opposition.

An Eskom spokesman confirmed three years of RCA decisions had been set aside. A Nersa spokesman could not immediately comment. It was not immediately clear when Nersa would review the RCA amounts and make new decisions.

($1 = 17.3231 rand)

(Reporting by Alexander Winning; Editing by Nqobile Dludla and Barbara Lewis)

Cooling towers are pictured at a coal-based power station owned by Eskom in Duhva

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