Where authorised by NERSA, power purchase costs will be recovered by the buyer as part of its regulated annual revenue allowance, with cost variances subject to provisions for review as set out in rule 16. Recoverable costs include:

These include prudently incurred costs by the buyer and/or an IPP in taking out hedging positions to mitigate, or in obtaining insurance or otherwise indemnifying itself and/or themselves against the risks allocated to the buyer and/or seller under a PPA including, without limitation, the costs of hedging its and/or their exposure in respect of commodity and foreign exchange risks linked to the price of fuel and/or foreign exchange risks linked to the repayment of debt.

These include contract management services required to develop, manage, monitor and account for its payment and financial obligations under a PPA.

These are costs that may result from the transition to a wholesale market and integration of the IPP in the market, or costs resulting from industry restructuring.

These are costs to the buyer associated with a seller’s termination.

These may be due to change in market structure, change in electricity demand, or change in the relative cost of power supply.

Any other costs not covered on the list which are prudently/efficiently incurred will be allowed by the Energy Regulator as PPA costs and they will be passed through.