Scramble to explain EEC’s E500M over-recovery

By Ntombi Mhlongo
 
There is a scramble to try and ‘manage’ Eswatini Electricity Company’s (EEC) E500 million over recovery that was unearthed by the Eswatini Energy Regulatory Authority (ESERA).

On Monday, ESERA said the presentation detailing the decision on the EEC’s application for tariff adjustment may have been ‘misinterpreted’.
 
In a press statement, ESERA said an impression appears to have been created that the EEC may have concealed information regarding an over-recovery emanating from the Regulatory Clearing Account (RCA) balances for financial years 2020/21 and 2021/22. 
 
The regulator said EEC submitted a tariff application with supporting information to justify the revenue requirement sought to be approved. It said the tariff application included a net over-recovery of E156,896,954, made up of RCA balances of E168,950,192 (over-recovery) and E12,053,238 (under-recovery) for financial years 2020/21 and 2021/22 respectively. 
 
“The regulator performed an analysis on the RCA balances, in line with the tariff methodology and relevant regulatory tools and noted that some submissions or some information received was insufficient. The regulator engaged the utility and sought clarity on some of the variances that were noted. The utility subsequently provided the Regulator with clarity and further supporting information,” reads part of the statement.
 
ESERA mentioned that based on the information provided by EEC, it conducted a thorough analysis of the RCA and made certain adjustments.

“Discretionary pass-throughs were made in operating expenses. These were adjustments made at the discretion of the regulator to decide if she allows EEC’s variances. Based on the submissions, the regulator disallowed certain operational expenses and allowed others,” ESERA said.

It said it resolved that half the over-recovery, E277.53 million, be liquidated in the financial year 2023/24 and the other half be liquidated in 2024/25, meaning that the EEC’s revenue requirement is reduced by this amount for each of these years. 
 
“The authority, therefore, wishes to dispel the unfortunate and incorrect impression created and confirm that the EEC, as an applicant, submitted supporting information for their request and the regulator, accordingly, reviewed and made the decision on the tariff application. The regulator reiterates as presented in her report that it is incorrect to suggest that EEC committed any illegal or untoward conduct in her tariff application proposal as it seems to be suggested in recently published articles,” ESERA highlighted in the statement issued by the Chief Executive Officer Sikhumbuzo Tsabedze.