Understanding NERSA's decision on ArcelorMittal South Africa’s tariff applications amid looming shutdowns
The National Energy Regulator of South Africa (NERSA) has ruled that ArcelorMittal South Africa’s (AMSA) applications for negotiated pricing agreements with Eskom meet eligibility criteria, but no tariff reductions have been approved.
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The National Energy Regulator of South Africa (NERSA) has ruled that ArcelorMittal South Africa’s (AMSA) applications for six-year negotiated pricing agreements with Eskom met the required eligibility criteria, but stressed it had not approved any tariff reductions for the embattled steelmaker.
NERSA said in a statement that AMSA’s applications for its Newcastle and Vanderbijlpark plants “do meet the eligibility criteria prescribed in the Interim Long-term Negotiated Pricing Agreement Framework (NPA Framework).”
The energy regulator explained that in September and October 2024, AMSA submitted applications to Eskom seeking reduced tariffs under the framework.
Eskom rejected both, saying AMSA had failed to comply with requirements. AMSA then petitioned NERSA, as allowed under the framework.
NERSA said it carried out “a comprehensive assessment of AMSA’s information submitted to Eskom to determine whether the provisions of the NPA Framework were applied appropriately and fairly” and concluded that “AMSA substantially complied with the prescribed criteria.”
However, it made clear that its decision was not approval for lower tariffs.
“It is important to emphasise that NERSA does not intend to interfere with the contractual agreements or price negotiations between Eskom and AMSA.”
It added that it did not approve any “AMSA application for a reduced tariff.”
It explained that only licensees may apply for deviations from approved tariffs under the Electricity Regulation Act of 2006.
“It will be AMSA’s decision to approach Eskom, following the Energy Regulator’s decision, to apply for and negotiate a favourable tariff,” said Nomfundo Maseti, NERSA’s full-time regulator member responsible for electricity regulation.
“NERSA’s role is to implement and enforce the NPA Framework provisions. This means that NERSA does not intervene in price or tariff negotiations on behalf of customers.”
This comes after AMSA last week confirmed it had placed its Newcastle blast furnace into care and maintenance and was preparing for the possible closure of its Long Steel business at the end of September which would impact its Newcastle and Vanderbijlpark plants.
The company warned of “the profound impact this uncertainty has on our employees, their families, our suppliers, and our customers, and the communities that have grown around the Long Steel business.”
Minister of Employment and Labour Nomakhosazana Meth has said AMSA’s potential closure could result in “an estimated 3,500 job losses and a further 100,000 jobs downstream.”