NERSA Rejects Eskom’s Grid Capacity Reservation Request

Energy, Solar

NERSA Rejects Eskom’s Grid Capacity Reservation Request

The National Energy Regulator of South Africa (NERSA) revealed significant decisions made during its meeting held on July 30, 2024. These decisions include approvals for Eskom’s Regulatory Clearing Account (RCA) balance, the issuance of a new distribution license, and the publication of a consultation paper on congestion curtailment.

1. Approval of Eskom’s Regulatory Clearing Account (RCA) Balance

NERSA has approved Eskom’s RCA balance of R8.095 billion for the 2021/22 financial year. This balance will be recoverable from standard tariff customers, local Special Pricing Arrangement (SPA) customers, and international customers. The detailed breakdown of the RCA balance is provided in Table 1 below:

Table 1: RCA Balance for the 2021/22 Financial Year

Category	Decision	FY2022 Actuals	FY2022 Variance	RCA Adjustment	RCA FY2022 NERSA Adjustment	NERSA Decision
Revised Return	13 123	12 946	-177	-177	-90	-267
Expenditure	57 019	73 966	16 947	-9 825	7 122	-4 825
Primary Energy	68 330	84 729	16 400	766	17 166	-10 853
Independent Power Producers (local)	40 631	36 714	-3 917	-3 917	0	-3 917
International Purchases	3 426	5 306	1 880	1 880	0	1 880
Depreciation	66 279	58 151	-8 128	-8 128	0	-8 128
Research & Development	151	149	-2	-2	0	-2
Levies & Taxes	7 266	7 512	246	246	0	246
Revenue	233 229	246 520	-13 291	22 814	9 523	0
Service Quality Incentives (SQI)	–	69	69	69	0	69
RCA Balance due to Eskom/(Customers)	23 778	-15 768	8 012	–	–	–
Nuclear Decommissioning from RCA 2013/14	–	–	83	0	83	83

The implementation plan for the 2021/22 RCA balance is under development for approval by the Energy Regulator.

2. New Distribution License for Inkosi Langalibalele Local Municipality

NERSA approved the issuance of a license to operate a distribution facility to Inkosi Langalibalele Local Municipality, following the disestablishment of Umtshezi Local Municipality. Inkosi Langalibalele Local Municipality will continue to charge tariffs as approved by NERSA and has been requested to apply for a trading license in accordance with the Electricity Regulation Act, 2006.

3. Rejection of Eskom’s Grid Capacity Preservation Request

The Energy Regulator did not approve Eskom’s application to preserve grid connection capacity for public Independent Power Producers (IPPs) in anticipation of the upcoming Bid Window 7 procurement process. The application was rejected because Eskom failed to identify specific customers or classes of customers it intended to discriminate against, and did not provide objectively justifiable differences regarding such customers.

4. Consultation Paper on Congestion Curtailment

NERSA has approved the publication of a consultation paper on Eskom’s application for congestion curtailment to be treated as a constrained generation ancillary service. This will allow Eskom to compensate Renewable Energy Power Plants (RPPs) for energy curtailed due to grid congestion.