Nersa has published a consultation paper on an application by Eskom to amend the calculation methodology for losses charged to embedded generators connected to its distribution network.

The losses charge refers to the cost that electricity generators pay to account for power lost when transporting electricity through the grid.

According to Nersa, the proposed amendment seeks to revise the existing formula used to calculate these technical losses to ensure it better reflects actual network costs based on recent studies.

“The proposed change aims to modify the existing formula for calculating technical losses incurred by embedded generators connected to the Eskom distribution network, ensuring that it better reflects the actual costs based on recent technical studies,” a statement released by Nersa read.

Eskom plans to implement the new methodology in its 2026/ 27 schedule of standard tariffs. Nersa explained that not all electricity generated reaches consumers, as some is lost as heat through conductors, transformers and other network components.

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“In practice, this means a generator must supply more electricity than what is delivered to consumers, with the difference representing transmission or distribution losses,” the regulator said.

Eskom argues that the losses charge provides an important financial signal, encouraging generators to locate closer to areas of high demand, as greater distances typically result in higher losses.

Recent technical studies conducted by Eskom show that embedded generators are now contributing to higher network energy losses across most regions.

The studies also found that the current rebate system – originally designed to benefit embedded generators – is no longer cost-reflective and effectively provides an unintended subsidy.

As a result, Eskom has proposed revising section 5.5.1 of the Tariff Code to adjust the formula used to determine these charges.

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In terms of section 5.1 of the Governance Code, Nersa serves as the approval authority for the Grid Code. Any amendments, exemptions or derogations must therefore be authorised by Nersa, guided by recommendations from the Grid Code Advisory Committee.

The regulator said the consultation process is being conducted in line with procedural fairness requirements, as outlined in the National Energy Regulator Act (Act No. 40 of 2004) and the Promotion of Access to Information Act (Act No. 2 of 2000).

Eskom’s full application can be accessed on Nersa’s website at www.nersa.org.za under “Notices > Public Hearings.”

Members of the public and interested stakeholders have until November 13 to submit written comments to ertsa@nersa.org.za.

A virtual public hearing will be held on November 24 via Microsoft Teams and livestreamed on X (formerly Twitter) and YouTube.

Those wishing to attend or present their views must submit attendance requests by 16:30 on November 17 to publichearings@nersa.org.za.