Agri Western Cape has lashed out at energy regulator Nersa for endangering the financial survival of farmers after a High Court ruling this week opened the way for even more electricity price hikes.
The court on Monday took Eskom’s side in a dispute over the amounts that energy regulator Nersa allowed the state utility to recover from customers for electricity supplied in the 2014/15, 2015/16 and 2016/17 financial years.
In 2018 Nersa decided to allow Eskom to recoup R32.69 billion through the regulatory clearing account mechanism. That has now been set aside, opening the door for Eskom to recoup much higher amounts through higher electricity prices.
According to Agri Western Cape, electricity costs are up to 20% of the variable costs of farmers in the province, making them very vulnerable to higher than expected power hikes.
The farmers’ organisation says higher tariffs will bring significant pressure to already cash-strapped households and agricultural enterprises who are affected by the covid-19 pandemic.
In a media statement Jannie Strydom, Agri Western Cape CEO, says that it was apparent that Nersa did not follow the correct procedure in its decision.
“Electricity costs account for up to 20% of the variable cost of farms. This is why the financial survival of producers is at the forefront when Agri Western Cape is seriously concerned about future tariff increases of up to 15%, as is currently being speculated,” says Strydom.
Electricity is essential in the direct utilisation of farming and is needed in the irrigation of many crops throughout the country. Strydom added that it made no sense why the consumer was made to suffer for the mistake of Nersa.
During public hearings in February Agri Western Cape called out ambiguities with regards to the extent and the composition of arrears income to which Eskom would be entitled.
“Agri Western Cape specifically called for more comprehensive explanations of arrears amounts and requested more clarity on the scheduling of recoveries, more specifically the impact on future tariffs,” says Strydom.
“The effectiveness of Nersa’s oversight role was questioned on the basis of obvious oversights and specific Eskom contracts that were not checked.”
The organisation has called for transparency from government over the matter. It said that the fact that arrears amounts can be registered for recovery by Eskom, holds no incentive to improve efficiency in the country.