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Definition

A system employed by the National Energy Regulator of South Africa (NERSA) to establish the price which Eskom can charge for electricity. Eskom applies to NERSA for evaluation and NERSA determines whether it is justified and in the best interests of the economy. In making this assessment, NERSA must consider the impact of electricity prices on those industries which traditionally use a lot of power such as the mining industry and smelters. More and more private companies are choosing to generate their own electricity, usually from renewable sources rather than Eskom’s increasingly expensive and unreliable supply. Ultimately, the intention is to move away from the multi-year price determinations (MYPD) towards a competitive pricing model where power producers compete to supply power to the grid which is then distributed by an independent organisation.

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