Energy Regulator grants 87c/kWh tariff relief to ferrochrome smelters
The Electricity Regulator has approved an application by Eskom to extend temporary tariff relief to ferrochrome producers Samancor Chrome and the Glencore-Merafe Chrome Venture for a period of 12 months.
Eskom made an application to the National Energy Regulator of South Africa (Nersa) to supply electricity to smelters owned by the two entities at a temporary tariff of 87c/kWh.
This, after Samancor Chrome and the Glencore-Merafe Chrome Venture expressed hardship under the existing tariff and terms included in negotiated pricing agreements (NPAs) approved in 2023 and implemented from 2024.
Nersa hosted hearings into the application on January 27, where Eskom outlined its reasons for having made an application for a reduced tariff and also asked Nersa to extend the six-month waivers approved last year in relation to the take-or-pay obligations included in their NPAs.
Despite being pressed by Nersa officials as to how the revenue gap between the NPA tariff and the new temporary tariff would be closed, Eskom did not provide clarity during the hearing, indicating that parallel processes were under way to address the issue.
It also confirmed that the 87c/kWh would be insufficient to allow for a resumption of full load from the smelters and indicated that an initiative was under way in relation to a longer-term solution aimed at further reducing the tariff to 62c/kWh.
In approving the temporary tariff, the Energy Regulator, which is Nersa’s highest decision-making body, said the approval was subject to the finalisation of a “government funding mechanism” that ensured that the shortfall between the approved NPA tariff and the temporary tariff was not recovered from standard tariff customers through the regulatory clearing account.
It must also provide Nersa with progress reports every three months to assist the regulator in monitoring the implementation of the temporary tariff.
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