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PCE Briefing – NERSA RCA decision 8 March 2016

PCE Briefing – NERSA RCA decision 8 March 2016. Background. Multi-Year Price Determination over 5 years For Price certainty and stability To facilitate consumer planning Based on projected/estimated scenarios & forecasted costs GDP Inflation Customer growth projections Plant performance

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PCE Briefing – NERSA RCA decision 8 March 2016

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  1. PCE Briefing – NERSA RCA decision8 March 2016

  2. Background • Multi-Year Price Determination over 5 years • For Price certainty and stability • To facilitate consumer planning • Based on projected/estimated scenarios & forecasted costs • GDP • Inflation • Customer growth projections • Plant performance • Primary Energy and Manpower costs • Correction and alignment of actuals with projections & forecasts • Regulatory Clearing Account (RCA) • 2% variations – No changes required • Between 2% and 10% NERSA’s discretion • Above 10% MYPD re-opening 2

  3. Previous MYPD’s MYPD1 MYPD2 3

  4. MYPD3 * Estimated RCA balance by NERSA based on preliminary analysis of Eskom’s performance ** Increase after the implementation of the RCA balance for 2013/14 *** Increase arising from Eskom’s application for the MYPD2 RCA Balance of R18 bn **** NERSA approval of R7.8 bn balance resulting in an additional 4.69% increase over and above the 8% already approved (i.e. 8 + 4.69 = 12.69) ***** Increase required by Eskom through the RCA application of R22.8 bn 4

  5. Summary of the Eskom RCA application 5

  6. NERSA Decision • Approved a balance of R11.241 bn in Eskom’s favour to be implemented on 1 April 2016. • R10.257 bn from standard tariff customers • R983 m from Special Pricing Agreements and international customers • The resultant average price increase is 9.4% for the 2016/17 financial year • A new application, based on revised assumptions, that take into consideration the current circumstances, be submitted within 3 months 6

  7. Summary of the decision & application 7

  8. Structural tariffs & Municipal tariffs • Eskom has applied for the structural tariffs to be tabled in Parliament by 15 March 2016 • NERSA will consider the application & approve before 15 March 2016 • NERSA will publish the consultation paper for the Municipality tariff guideline increases after approving the Eskom structural tariffs • The target date for conclusion of the Municipality tariff guideline is 30 March 2016 • Municipalities will be required to apply to NERSA for their tariff increases before 1 July 2016 8

  9. Thank you

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