Comment on Eskom’s MYPD 2 Proposal

by ALTMAN, M, 2009
Centre for Poverty Employment and Growth, Human Sciences Research Council

This is a submission to NERSA (South Africa’s energy regulator) in respect of the MYPD2. Eskom applied to NERSA in respect of the second round of a three-year Multi-Year Price Determination (MYPD2) for the period 2010/11–2012/13. Its initial submission in September 2009 requested a 45% nominal increase in each of the three years. A second application was submitted in November 2009, reducing this request to 35% a year for three years, then rising by 13% per year for two years, based on revised assumptions. In 2008, the Human Sciences Research Council prepared a study that investigated the potential economic impact of differently distributed pricing or rationing options to reduce peak electricity usage and electricity consumption. The study also considered the potential impact of different pricing proposals on Eskom itself. A submission was made to NERSA in 2008 on this basis, which should be read in conjunction with this one. This submission to NERSA updates the work, and reflects on Eskom’s 2009 submissions. More specifically, it assesses: • The financial implications of alternative pricing scenarios: The financial modelling prepared in 2008 has been updated in view of revised economic forecasts, as well as Eskom’s initial and revised applications. The underlying spreadsheets used for this submission were shared with Eskom, NERSA, the Presidency and Treasury, as well as a number of experts and stakeholders. • The implications of Eskom’s proposals for the economy – for firms, and for growth, inflation and employment more generally.