The National Energy Regulator of South Africa (NERSA) has rescinded its plan to implement new electricity price determination methodology rules (EPDMRs) approved last December.

NERSA aimed to replace the regulatory clearing account system with a new methodology that allows utilities, such as Eskom, to adjust tariffs proactively. This approach permits tariff increases to recover revenue lost during periods of low sales or when higher generating costs are incurred. The objective is to enhance transparency and predictability in tariff adjustments, ensuring they align more closely with actual costs and operational performance, NERSA said.

The new EPDMR framework shifts away from a traditional “sales and revenue” model towards prioritising the efficient use of generating capacity to set pricing. Under these updated rules, tariffs will no longer be aggregated but determined individually for each licensed activity across the entire electricity value chain from generation to distribution.

Eskom has opposed the new tariff rules since inception, saying the new methodology is untested, vague and unimplementable and will likely lead to higher tariffs.

The regulator said it still hoped to implement these rules at a later stage but more time was needed to clarify the approach, process and evaluation of future tariff applications.

“The decision follows consideration of the practicability of implementing the rules at this stage and the fact that licensees and stakeholders are not yet ready for the implementation,” said Charles Hlabela, NERSA’s Head of Communications.

“NERSA remains committed to reviewing its regulatory tools, considering the dynamic changes in the electricity supply industry as well as legislative change, the unbundling of Eskom and new investments in energy generation,” he added.